Playtech leadership has advised partners to exercise caution when it comes to navigating volatile regulations in core markets.
In the wake of its H1 financial report where it reinstated its commitment to Latin American markets like Mexico, Colombia and Brazil, the B2B gambling group expressed some reservations about a list of proposed tax changes in the relevant jurisdictions.
A major development for Playtech in Mexico saw the company acquire a 30.8% equity stake in local operator Caliente. SBC News spoke to both Playtech’s CFO, Chris McGinnis, and CEO Mor Weizer, about the long-term prospects of this deal.
Taking on the tax bills
While McGinnis emphasised the commitment of Playtech towards the Caliente partnership and the growth opportunities it provides, Weizer focused more on the rapidly evolving regulatory aspects of the Mexican market.
While still under review, a proposed legislation ahead of the 2026 Budget wants to increase the current GGR duty from 30% to 50%. Weizer brought up examples from across Europe where tax hikes have caused a reciprocal effect on the market.
“We’ve seen from international developments like the Netherlands that increases in the gambling tax can have unintended consequences.
“Over there, this has caused a reduction in marketing investments and some operators leaving the market, as well as an increased activity of unregulated platforms.
“While obviously we would prefer the tax level in Mexico to remain the same, we can’t really foresee what the impact an increase will have, and we are still in the process of evaluating.”
LatAm remains firmly in Playtech’s sights
Latin America has caught the attention of many gaming firms, both B2B and B2C, with Brazil in particular seeing a rush of market entrants in the months since a regulated betting space was launched in January.
Amidst this excitement, it is important not to forget other Latin American markets, however, many of which are seeing similar changes to Europe around taxation. Looking at Colombia, similar proposals were tabled to make the temporary VAT tax a permanent charge.
While reaffirming that the country remains a priority for Playtech, Weizer also advised caution, outlining that the market might become unsustainable for some operators if the government decides to go through with its decision.
In Brazil, Playtech revenue proved to be volatile compared to other jurisdictions like the US and Canada, mainly due to the regulation of the market at the start of this year. However, Weizer remained confident that Playtech has acted accordingly, and that its local partners are now well positioned for accelerated growth.
“Brazil has the strictest set of regulations worldwide, even when compared to the US, and they introduced a very strict onboarding process that at the start led to a high level of rejection rates,” the CEO explained.
“However, we now see GGR returning to very similar levels to what we saw prior to the market’s regulation. Estimates suggest a market value of $6bn by the end of this year, and an expected growth of 15% between now and 2030, reaching $17bn.
“While it took the market some time to adjust to the new regulations, I believe that from this point onwards we will see accelerated growth. This is a very big opportunity for us. We believe Brazil is one of the most promising countries for the gaming industry in the coming years.”
Snaitech sale sets up B2B focus
Finally, Playtech’s H1 corporate accounts were positively impacted by the sale of Snaitech to Flutter Entertainment, a huge moment in the company’s transition to a solely B2B enterprise.
When asked by SBC News about how Playtech intends to prioritise the deployment of newly-acquired capital, McGinnis added that everything is on the table – from M&A to shareholder returns.
“We have a very strong balance sheet and I think the best thing that it does is give us flexibility that we can look into all of these options,” the CFO said.
“We’ve always had an M&A strategy. When we first acquired Snaitech, it was part of that strategy. We still have that and we’re regularly looking at M&A opportunities.
“In terms of organic growth, our business can fund its expansion, for example into markets like Brazil. With our balance sheet as well, we’re looking at capital allocation more and more closely.
“In the future I expect returns to shareholders either through dividends or buybacks to be a part of that as well.”
September 15 will see SBC organise a ground breaking charity football event in Lisbon. Make sure you get the chance to see some of the most legendary names in football by securing your ticket today at https://www.legendscharitygame.com/
More Information & Source
Original Source:
Visit Original Website
Read Full News:
Click Here to Read More
Have questions or feedback?
Contact Us
Other Articles
Allwyn moves UK National Lottery to Scientific Games’ Momentum
No Comment! Be the first one.