Put straight to bat in Playtech’s H1 earnings call, CEO Mor Weizer and CFO Chris McGinnis refused to answer questions concerning the LSE technology group’s ongoing litigation with Evolution AB in the New Jersey courts.
“We are not going to answer any questions on litigation,” Weizer stated. “I have lots to say, but I can’t, as we are under legal privilege and can’t take any questions.”
Though the ‘Spectrum litigation’ continues to grab headlines, Playtech’s leadership duo preferred to stay on the script of its H1 results, declared as a “step change back to profitability” as the business restores its core discipline as a B2B technology supplier to global gambling markets.
The step change has been led by an unmatched commercial pipeline across North and Latin America. Partnerships with FanDuel, DraftKings and bet365, alongside Playtech’s exposure to market-leading Mexican operator Caliente, helped the group deliver a pre-tax profit of €113m (£97m).
Confidence was further buoyed by Weizer and McGinnis reporting no evidence of the compressed margins affecting some competitors. Playtech’s revised operating model expanded its B2B margin from 21% to 31%, supported by cost controls and the operating leverage generated as previously developed products began producing revenue.
Leadership nevertheless warned investors that earnings and margins would normalise during the second half. Particular attention remains on the UK, where the increase in Remote Gaming Duty to 40% will place further pressure on Playtech’s tier-one operator partners.
The mood remained upbeat as management argued that Playtech’s return to a pure B2B structure had elevated its position as a leading provider of games, platforms and systems for gambling’s regulated era.
Yet Weizer believes Playtech remains disadvantaged by licensed suppliers willing to continue servicing unlicensed operators. Competitors choosing illegal tactics can access revenues rejected by Playtech while avoiding many of the tax, certification and compliance costs imposed on licensed businesses.
Where is the legal line?
Addressing analysts, Weizer placed regulated-market expansion as the central pillar of the strategy adopted following the disposal of Snaitech – “We set the strategy to become a true B2B technology business that is focused on customers and pushing forward in regulated markets,” he explained.
Weizer told investors that more than 85% of Playtech’s income now comes from regulated jurisdictions, with the proportion expected to increase as the company expands its partnerships and more countries adopt licensing frameworks.
“We are on a journey, and the industry is on a journey,” he said. “The vast majority of Playtech’s income is in regulated markets, and it’s more than 85%.”
However, Weizer stressed that Playtech does not treat all markets without a domestic licensing regime as illegal. The distinction is important to the supplier’s risk assessment of markets that may be moving towards regulation.
“We are not, as a principle, against unregulated territories,” he said.
“We are against people operating in illegal markets, people operating in sanctioned countries and people supporting unlicensed operators in regulated markets. This is not the model of Playtech. Playtech will not be involved.”
Weizer cited Brazil and the Netherlands as examples of jurisdictions where Playtech maintained a presence before regulation formally took effect because authorities had provided guidance on what businesses could and could not do during the transition.
“Unregulated is not illegal. Illegal is illegal. Sanctioned is sanctioned. Supporting unlicensed [operators] should not happen,” he stated.
The company will therefore continue to assess each jurisdiction individually, taking account of its laws, political direction and prospects of introducing a regulated framework. Those assessments are conducted continuously and overseen at board level.
“We will continue to support those that we believe over time will become regulated, or where we can operate and feel comfortable given the risk assessment by the board,” Weizer explained.
Regulated markets can tame illegal supply
Playtech’s response is to accept the short-term imbalance and treat regulatory credibility as a long-term commercial advantage.
Its structured agreements with Hard Rock Digital and Caliente demonstrate that approach, combining comprehensive technology arrangements with investments in licensed operators. Playtech expects these partnerships to expand geographically and deepen as customers add further products, brands and markets.
“Our investments go into regulated markets, so the growth in regulated markets for us will grow faster than unregulated markets,” Weizer said.
Having led Playtech for the past 20 years, Weizer recognises the delicate path governments must navigate when regulating individual markets. He is acutely aware of the political sensitivities and competing interests involved, which saw Brazil, Germany and the Netherlands take more than a decade to launch their respective regimes—frameworks that continue to face intense political scrutiny.
However, he acknowledged that the company could leave jurisdictions offering little prospect of regulatory development.
“Over time, we will likely consider pulling out of certain markets,” Weizer said.
The strategic wager is clear: competitors prepared to service illegal operators may secure additional revenue today, but Playtech believes scale, regulatory trust and comprehensive technology partnerships will prove more valuable as global gambling moves further towards licensing.
“You should expect us to see a lot of growth in regulated markets,” Weizer concluded. “That eventually will result in the regulated part of our business becoming bigger and bigger over time.”