Playtech walks away from the US while others sit & wait & hope19th August 2013 8:59 am GMT
Playtech’s hopes of entering a regulated US market appear to have been scuppered along with the sale of its stake in Sportech.
The market-leading software house was all set to become Sportech’s technology supplier for US customers as the pools provider went after clients in New Jersey and elsewhere. But as Sportech went about its business in Atlantic City, it soon became clear that Playtech would not or could not submit to New Jersey’s regulations.
Playtech refused to return numerous calls, emails and texts to clarify its US strategy but sources suggest the Playtech hierarchy has given up on the regulated US market to focus on its core operations elsewhere.
The absence of Europe’s market leader from the US will be greeted with Hosannas by the likes of Aristocrat, Bally, IGT and WMS but also by more experienced European suppliers such as bwin.party, 888, Gamesys and GameAccount Network. All four have deals with New Jersey casinos and are going through the licensing process as we speak.
However, Playtech is not the only European company with regulatory worries in the US.
The gossips claimed 888/Caesars had upset the regulator when it accidentally launched a real money site, which should have been a play-for-fun site, back in April. Nevada Gaming Control Board chairman AG Burnett laughed off the suggestion when we put it to him.
While 888’s executives claimed in a recent analysts’ call that they are fully tested and waiting for the green light from the regulator, Burnett said the delay was due to “minor platform modifications” and “additional tweaks to systems”.
One can assume they will launch relatively soon as they were not among the companies (ACEP, Monarch and South Point), which were granted six-month extensions to their license applications just last week. However, it is four months since Ultimate Gaming launched its poker site and it is worth reiterating respect for it getting its product live while more experienced operators have floundered…like bwin.party, for example.
bwin seems to be suffering from the indecision of its partner MGM more than anything else. But it has also had a recent brush with the US authorities, which could have big ramifications for itself and/or the rest of the industry.
Early last month bwin.party quietly announced it had settled with the state of Kentucky, a deal, which it claimed resolved “the only remaining litigation” from the company’s pre-2006 US operations.
The problem is that in doing so it might have created a dangerous precedent for other states wanting to pursue it, or other companies, through the courts. Kentucky used an ancient statute that allows relatives of deceased gamblers to recover gambling losses. Kentucky, along with the District of Columbia, Georgia, Illinois, Indiana, Massachusetts, New Jersey, Ohio and South Carolina, also has a clause in the statute that allows third parties (such as the government or greedy contingency fee lawyers) to retrieve the debts.
bwin.party will claim it is protected by the five-year statute of limitations that expired on October 11th, 2011 – Kentucky sneaked its case in before then – but other companies with post-2006 operations might not be so lucky.
“It is a very dangerous precedent,” confirmed a lawyer with knowledge of the cases.
PokerStars has told Kentucky to take a hike as the state accepted money from its settlement with the Southern District of New York but it could still lose. ‘Stars is facing similar action in Illinois. It has various legal arguments on its side but there is little sympathy for big businesses among state governments desperate to generate revenues.
“It’s classic socialist redistribution of wealth,” quipped the same lawyer.
While bwin.party might not be bothered about the fate of PokerStars or any other post-2006 operator, it might not be completely safe either.
The settlement itself could be a red rag to bullish and creative lawyers wishing to pursue cases under laws not limited to the nine states listed above. Federal repo suits can be brought civilly. California has a consumer protection act, under which lawyers could go after operators claiming false advertising. It should be noted here that the Kentucky cases were bought by contingency fee lawyers and not by the state attorney general.
bwin.party is convinced it has fought the last of its US legal battles but in advertising its willingness to part with millions of dollars, it could have left itself and others open to yet more litigation.