Malaysian gambling crackdown forces Playtech to issue profit warning

Problems in Asia and a troublesome bingo contract have forced gaming and spread-betting company Playtech to issue a profit warning sending the shares plunging by a fifth.
Management at the Isle of Man-based business, which was founded by billionaire Teddy Sagi, said it expected annual profits to be 5pc lower than the bottom end of market expectations, prompting analysts to wipe about €20m (?17.8m) off their full-year earnings forecasts and sending Playtech shares down 218.5p to 768p.
A key problem for the company is understood to be Malaysia, which is presently an unregulated market and has seen its government move to prevent citizens from accessing online gambling sites and mobile apps.
The country’s leaders are considering changes to its Common Gaming House Act 1953 to plug loopholes which enable citizens to gamble online.
Deputy Prime Minister Ahmad Zahid Hamidi is quoted as saying that the government hasn’t decided on whether the change of the law will be in the form of an amendment or if the parliament will craft a new preventive law that will specifically target online gambling activities.
Analysts at Investec predicted the Malaysia issue was responsible for the bulk of the value of the profit downgrade by the company.
Investec added it thought Malaysia represented 5pc of Playtech’s total revenue, which came in at €709m in 2016.
Elsewhere, its contract with Sun Bingo, which involves Playtech providing the technology for the game, has continued to be problematic.
Malaysian gambling crackdown forces Playtech to issue profit warning

Teddy Sagi (right), the billionaire founder of Playtech
Earlier this year Playtech chief executive Mor Weizer admitted it had been forced to spend more money than planned to attract customers and that it was a year behind where it wanted to be with the project.
In its update this week, the company said the contract “remains challenging” partly due to the re-launch of the new Sun Bingo site.
The company’s financial division Tradetech, which serves professional traders, has performed as expected.
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