Online gaming software supplier Las Vegas From Home (LVFH) has signed a letter of intent to participate in a legal online gaming offering in Mexico with Spanish operator Codere and its local partner, Salinas TV Azteca Group.
The deal will see the trio incorporate a new company in Mexico in which Codere will hold a 51 per cent stake, with LVFH taking the remainder. The business will in turn take a 51.03 per cent stake in the partnership established between Codere and Azteca in September 2012, effectively giving LVFH a 25 per cent stake in the venture.
The agreement will see LVFH formally license its gaming platform on an exclusive basis to power the Greenplay.mx site which launched at the start of this year, as well as additional sites, and receive regular software licensing royalties.
LVFH will inject a total of $4m into the venture to aid development and marketing of the iGaming business, which operates under a federal gambling licence Azteca and Codere have secured from Mexico’s Ministry of Interior (Secretaría de Gobernación/SEGOB).
Alongside its gaming platform, LVFH will also supply the company with a selection of HTML5 games, including bingo, poker and a sportsbook, as well as a selection of casino games.
The company’s president and chief executive Jake H. Kalpakian said he was thrilled that LVFH would now be associated with a leading international operator like Codere and a high-profile media conglomerate like Azteca.
“LVFH shall benefit significantly from this enviable position of participating legally in the huge Mexican iGaming market and with the opportunity of being able to get involved in other countries in the Americas where online gaming is legal,” Kalpakian said.
“This partnership with the Salinas Group [Azteca’s parent company] in Mexico shall allow the Mexican partnership to promote and market its operations in Mexico via television and the use of the Salinas Group’s diversified companies and networks,” Kalpakian continued. “It is anticipated that the revenues that shall be generated from this partnership shall enable LVFH to become profitable.”
In order to fund the deal LVFH will utilise existing funds as well as money from exercising outstanding warrants, and the proceeds of a non-brokered private placement of 5m LVFH units at a price of 10 cents per unit. Each unit will consist of one LVFH share and one LVFH share purchase warrant that allows the owner to exercise an option to purchase a share at a price of 10 cents for five years.
LVFH’s new partners, Codere and Azteca, have been working together in Mexico since 2012, with Codere active in the land-based market since 1998. Azteca, formerly TV Azteca, is Mexico’s second-largest mass media company and has a strong presence in the US and across Latin America.