Caliplay instructs Playtech to end role in Mexican JV

Shadows are cast on the future of Mexican online gambling brand Caliente.MX, as joint-venture partners Playtech and Caliplay  continue their legal dispute. 

This afternoon, Caliplay SA, the online subsidiary of Mexican casino operator, Grupo Caliente, announced that it would launch legal proceedings in the Civil Court of Mexico against Playtech.

Caliente’s subsidiary seeks “the annulment of its legal relationship with Playtech and its related parties” due to contractual disputes.

Pursuing its annulment, Caliplay noted that on 28 August, Mexican Courts had ‘accepted jurisdiction over the claim’, and demanded that Playtech carry out interim orders pending a final resolution including the suspension of key rights held under the JV agreement.

Playtech has been ordered to continue providing software and services to Caliplay pending final resolution of the claim, in which the operations of the JV cannot be disrupted.

The filing ended by stating that “Caliplay is keen for this matter to be resolved quickly, and is committed to maintaining a channel of communication with Playtech through which any disputes can be discussed and resolved”.

The fallout of the JV was exposed in February when Playtech approached the English courts for clarity regarding a disagreement with Caliplay. 

The point of contention was whether Caliplay retains the option to redeem an ‘additional services fee‘ component of its strategic agreement on JV terms. 

Playtech noted that the fee should be either mutually agreed upon or determined by an independent investment bank, assessing whether Caliplay  would be entitled to the additional services fee up to December 31, 2034. 

As disclosed by Playtech, as of June 30, 2022, the fee amounted to €34.4m, a rise from the previous year’s €22.3m. Playtech claims the option to redeem the fee has expired, referencing this in its interim report for the first half of 2022.

Caliplay insists the option should still be available and expressed surprise over Playtech’s unilateral decision to seek court intervention without prior notice. Caliplay also highlighted that Playtech did not mention board approval in its public statements or interim report. The Mexican business stated that it seeks settlement to the dispute as its preferred outcome.

Playtech has served as lead interactive platform and technology partner of the Grupo Caliente business since 2014, in which the FTSE technology group co-launched the caliente.MX brand. Prior to the fallout, Playtech announced that it was reviewing options to spin-off and public listing  Caliplay on the Global Nasdaq exchange.

This afternoon, Playtech issued the following response: “Caliplay is a highly valued customer and partner of Playtech and this has been an extremely productive relationship for both parties. 

Whilst Caliplay has stated that the Mexican courts accepted jurisdiction on 28 August 2023, Playtech only became aware of the issuance of proceedings today. Playtech has not yet had access to the court filings in Mexico and, to the best of its knowledge, has not yet been served with any proceedings. Playtech is therefore only aware of the matters in Caliplay’s announcement.

Once Playtech has had access to Caliplay’s court filings and has been able to review the substance of any proceedings, the Company will update shareholders further as necessary.”