Playtech (AIM: PTEC) has formed a number of strategic partnerships with New York-based Scientific Games Corporation (NASDAQ: SGMS) to jointly develop and market next-generation internet and land-based gaming products and services. Specifically, the companies will create a new joint venture company, SciPlay, and jointly progress Playtech’s propriety Videobet platform.
The partnership has been welcomed by investors on both sides of the Atlantic, Playtech shares advanced nearly 13% in London, whilst Scientific Games climbed almost 8% in New York.
The 50:50 SciPlay joint venture will deliver the latest online technology to government-sponsored and government-regulated lottery operators, including US state lotteries. Sciplay will offer a range of gaming content consistent with varying regulatory regimes and will have globally exclusive rights to Playtech's internet technology.
The strategic partnership provides exclusive access to Videobet technology for Scientific Games’ operations in North America, the United Kingdom and other key jurisdictions, and non-exclusive access in the rest of the world. Playtech will also develop Scientific Games' next generation terminal management systems, offering gaming systems to both government-backed and commercial operators.
From the Videobet subsidiary’s perspective the deal is considered to be transformational, with Scientific Games providing critical mass to the platform. According to Playtech CEO Mor Weizer the partnership validates the company’s belief in server-based gaming, and offers a unique cross-platform capability.
The partnership is expected to be relatively neutral to Scientific Games' 2010 earnings, modestly accretive to Playtech's 2010 earnings and to be accretive thereafter for both companies.
Disclosure: The author holds no positions in the company