Ladbrokes-Playtech deal to launch Vegas, mobile and tablet titles

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A newly struck deal between Ladbrokes and software developer Playtech will see new ‘Vegas’ branded titles, mobile and tablet games appear across the Ladbrokes online gaming network.

Playtech already provides Ladbrokes with several services, including Videobet and bingo games, but from May 2013 the company will also advise the sportsbook brand on how to enhance its revenues from digital services. The first visual impact of this is likely to be the addition of a ‘Vegas’ tab on the Ladbrokes website, which will give members access to Playtech’s games and casino titles, as well as selected third-party products.

The Ladbrokes announcement reads: “In due course, Ladbrokes will also migrate to Playtech’s download casino and poker products.” Playtech’s adds: “It is anticipated that, over the medium term, Playtech’s industry-leading IMS [Information Management Solution] will become the foundation of Ladbrokes’ digital backend, enabling Ladbrokes and its customers to enjoy the benefits of a fully integrated experience across all products and channels.”

Under the terms of the deal, which is scheduled to last for at least five years, Playtech’s success in raising Ladbrokes’ digital revenues, compared with the brand’s full-year performance in 2012, could unlock several interim bonus payments. If Ladbrokes’ base earnings before interest, taxes, depreciation and amortisation (EBITDA) are raised by £35 million, £70 million or £100 million by 2017, Playtech will be entitled to a ‘success fee’ payable in a combination of cash and Ladbrokes shares.

The formula to calculate the exact size of the success fee payable is relatively complicated, and depends on the percentage uplift in EBITDA that is achieved; 75% of it is payable immediately, with the remainder due when the next interim target is reached. Notably, the absolute upper limit on the success fee has been set such that Ladbrokes’ shareholders are not required to give permission before it can be paid.

Ladbrokes expect to achieve several outcomes from the deal: an increase in online and mobile revenues; the expertise of a skilled marketing team; the benefits of Playtech’s customer relationship management products; investment in digital infrastructure; payment that is closely aligned to growth in earnings; a compelling product range for customers; and an integration period before the deal is fully finalised.

Meanwhile, Playtech reveal that they have created an incentive scheme within their own group responsible for delivering the EBITDA targets, with the aim of rewarding the individuals who contribute towards that success. Playtech CEO Mor Weizer calls the deal “a landmark transaction for Playtech”, adding that his company is unique in its ability to deliver a deal across such a breadth of different services and software types.