Australian gambling machine maker Aristocrat Leisure has agreed on Oct. 18 to buy one of the world’s largest gambling software developers Playtech for $3.7 billion. Based in the U.K., Playtech employs nearly 680 specialists in Kyiv — they develop technology for online sports betting, poker, bingo and casinos.
Aristocrat expects to complete the acquisition of Playtech in the second quarter of 2022. It is not clear what this deal means for Playtech’s business in Ukraine, but the company’s employees’ stock options — contracts allowing them to buy or sell a stock of a company — could grow, as Playtech’s shares soared 57% to a three-year high on Oct. 18.
Playtech opened its office in Kyiv in 2011. The company employs nearly 7,000 people in 24 countries, including Ukraine.
“Kyiv has a convenient location — there are many flights to Europe and direct flights to Israel,” said Victor Nesytov, the country manager at Playtech in an interview in 2012. “The quality of work of Ukrainian employees is just crazy — they do everything correctly and on time,” he added.
This deal will help Aristocrat, which already operates in 90 countries, to expand to new markets, particularly the U.S. Playtech has recently entered the American market as states like New Jersey have relaxed rules for online gambling and sports betting businesses, Financial Times reported.
Outsourcing growth
In 2020, Playtech’s annual revenue was over $1 billion — $500,000 less than in 2019, before the pandemic, according to the company’s financial statement. The revenue of the Ukrainian office was $34 million last year, while its net profit was $840,000 million.
Playtech was founded by Israeli billionaire Teddy Sagi in 1999 in Estonia. In 2006, it went public on London Stock Exchange, reaching a market capitalization of $2.8 billion on Oct. 19 in 2021. Playtech develops software for 170 online gaming operators, including sports betting giants Entain, Flutter and Bet365.
At first, Playtech only employed Ukrainian high-tech employees who worked at one of the country’s largest outsourcing company Ciklum but then expanded its staff. Since the beginning, Ukrainians have developed mobile games and a platform for all of Playtech’s products.
Globally, the online gambling industry is growing rapidly, reaching $67 billion in 2020. The industry contains opportunities for Ukraine. Since gambling became legal in the country in 2020, it has already brought over $38 billion to the state budget. Experts expect the local market to reach $20-30 billion in the coming years.
With Playtech, Australian slot machine makers could go beyond selling pokies to casinos and start developing online games, where players don’t gamble real money, said Trevor Croker, Aristocrat’s chief executive in Nevada.
Gambling market
Aristocrat Leisure is Australia’s 16th largest public company, with a market capitalization of $29 billion. The company was founded in 1953 in Sydney and started to expand into Europe during the ‘swinging sixties.’ In the first six months of 2021, the company’s revenue reached $2 billion, according to the company’s financial statement.
In 2017, Aristocrat acquired the Israeli game developer Plarium for $500 million. It employs over 900 people in Kyiv, Kharkiv, Lviv, and Odesa. Since 2018, nearly 150 Ukrainian techies have also worked at London-based game development firm Product Madness, acquired by Aristocrat in 2012.
The Australian gambling company said it would fund the deal with Playtech by raising $964 million in equity, alongside new debt and existing cash. It expects a boost to earnings from the first year of closing the deal, Reuters said.
