Ladbrokes extends Playtech partnership

Gambling group Ladbrokes has extended its partnership with gaming software developer Playtech to focus on digital business growth.

Playtech will provide digital marketing and consumer relationship management (CRM) services to Ladbrokes.

The company is setting up a new, 100%-owned e-commerce and digital marketing operation based in Israel and integrated with Ladbrokes' existing digital teams in London and Gibraltar.

The agreement also allows Ladbrokes to access Playtech's full product suite and technology, including its information management system back-office system.

Part of Ladbrokes' digital focus, the agreement will allow the company to launch a "Vegas" tab on the website using Playtech casino and games products. In due course Ladbrokes will also migrate to Playtech's download casino and poker products.

The agreement will be effective from 1 May.

"Ladbrokes has made significant progress over the past two years by investing in our core technology, revitalising our brand and making our customer offer more competitive," commented chief executive officer Richard Glynn.

"The formation of a new, Ladbrokes-owned, e-commerce and digital marketing services function, in addition to an expansion of our existing product relationship is a material development. This relationship will accelerate our progress in a sustainable way over the next five years and beyond," he concluded.

Analyst view

Analyst at Investec Securities, James Hollins, retained a 'buy' recommendation on the stock, with a price target of 250p.

"A strong digital marketing/CRM function was, in our view, the key factor missing from the Ladbrokes online channel and we welcome the deal, with financial upside shared between Ladbrokes and Playtech," commented Hollins.

"EBITDA upside post-launch and integration will serve as the basis for payments to Playtech [in] a 'no win, no fee'-type deal, thus limiting financial outlay risk, but also ensuring upside is shared with Playtech.

"This strikes us as a sensible structure and we remain supporters of the ability of Ladbrokes to drive a substantial improvement in its digital platform."