We need to talk about Playtech15th April 2013 8:15 am GMT
Playtech’s dominance of UK bookmakers’ online casino operations is starting to look ridiculous.
To recap, it recently scooped an all-encompassing contract with Ladbrokes from chief rival Microgaming. It will continue to supply Ladbrokes’ fiercest competitor William Hill and the UK’s third largest bookmaker Gala Coral. It also supplies casino software to online market leaders such as Paddy Power and Bet365 and the UK’s largest parimutuel betting shops Betfred and Sportech.
To describe Microgaming as Playtech’s “chief rival” is starting to sound faintly ludicrous. OpenBet might have a stronger claim on the title but even it is beginning to be left in Playtech’s wake.
In an email interview last year, Microgaming CEO Roger Raatgever told me: “The Microgaming platform offers an impressive and fully integrated business solutions product, which meets the dynamic needs of a particular market segment.”
He did not respond to further questions so it remains unclear what he meant by “a particular market segment”. While Playtech has carved out a huge chunk of the market containing leading UK bookmakers (particularly), the most high profile clients with Microgaming are 188Bet, 32Red, Betsson, Interwetten and Unibet.
These five vastly different operators do not make a market segment (unless you claim Betsson and Unibet are the Nordic segment) so I don’t think this is what Raatgever was driving at.
It is more likely Raatgever was talking about the 100+ private dot.com casino operators about which very little is known. Microgaming’s most important client might be Australian gaming veteran Jamie Taylor, who owns the Casino Rewards Group. Taylor is an online marketing legend, who has acquired a roster of 29 brands since launching around the turn of the century.
All his brands from Aztec Riches Casino to Blackjack Ballroom, Captain Cooks Casino, Golden Tiger Casino, Phoenician Casino, Players Palace and Yukon Gold are licensed out of Kahnawake. Many of these brands were distressed assets and Microgaming clients, when he acquired them. Taylor could be second only to founder Martin Moshal in terms of the influence he wields over Microgaming.
It is operators like Taylor that allow Raatgever to shrug off the loss of Ladbrokes as insignificant to the wider Microgaming business.
“The vast majority of our operators have experienced double digit growth in the last few years and continue to do so, in testament to our software offering, and our technical and commercial support,” Raatgever told us this week. “In fact, our biggest operators have enjoyed even greater growth, so the impact of the Playtech deal on Microgaming will not be significant.”
However, the Ladbrokes deal is very significant for Playtech. You have to marvel at Playtech’s deal-doing prowess. Not only did it scoop £424m from its share of William Hill Online but it then managed to secure a deal with Hills’ arch-rival Ladbrokes after gaining its independence.
To be fair, the split should benefit both parties. William Hill executives have been frustrated by some of the restrictions placed upon it by Playtech vetoing initiatives that were not directly beneficial to the supplier.
“Having done the Playtech transaction so that we’re back to being one company again, it gives us a lot more freedom to leverage our retail arms online and vice versa,” says William Hill director of customer experience and innovation Jamie Hart. “That gives us the green light to pull retail into the 21st century and make it a proper overall William Hill experience.”
OpenBet continues to provide the sports betting platform for many of Playtech’s bookie clients but you can be sure Playtech are going after that segment too.
Over the last couple of years Playtech has invested huge amounts of money into its Information Management Solution (IMS). This is now at the core of the entire Gala Coral gaming system. It is a mighty beast capable of supporting operations of any product online and off with an advanced bonusing system and loyalty scheme that can run across platforms and products.
Playtech’s engineers have been busy reinventing the Geneity sportsbook since it was acquired just over a year ago. If they have unleashed a sportsbook with anywhere near the power of its casino or its IMS then it’s not just OpenBet that should watch its back. Sporting Solutions and Kambi, to name but two, should be worried. You can be sure Playtech will be very convincing on the benefits of moving your sportsbook to Geneity.
And look at poker. iPoker could be the only network left standing next to the overwhelming dominance of PokerStars. Ladbrokes has yet to make a decision on whether to move its poker to Playtech but insiders expect it will. Then, will Unibet stay? The Microgaming Poker Network, which has done so much good work over the last year to reinvent itself, looks on shaky ground. You can easily envisage a future where Stars, iPoker, 888 and Party are the only rooms with any action.
This consolidation of the market place is probably quite disconcerting for anyone that’s not working for Playtech. Can one supplier really supply everyone with everything? OK, that’s an exaggeration but someday soon it might not be a massive one.
Luckily it’s a big old world and there’s plenty to play for outside the realm of the Major Listed Operator. But for companies that were once such close rivals, it is extraordinary to watch Microgaming and Playtech moving in completely different orbits.