Playtech Not Providing ‘Warm and Fuzzy’ Feelings

London-based bookmaker William Hill PLC has taken a lot of heat in the Mojave Desert.

On Thursday in Las Vegas, the company was granted Nevada Gaming Commission approval to operate its acquired majority of the sports betting market in the Silver State. However, it first had to fend off tough questions from regulators on its online gaming plans.

William Hill spent significant time in front of the five-member panel addressing its business relationship with gaming software supplier Playtech Ltd., whose founder and majority shareholder, Teddy Sagi, served jail time in 1996 for fraud and bribery. Regulators have seen the partnership with Playtech as an unattractive component of William Hill’s past and present.

A point that William Hill stressed repeatedly is that not a single Playtech employee works for the company. The two businesses have a joint venture in William Hill Online. The Gibraltar-based subsidiary is 71 percent William Hill and 29 percent Playtech.

William Hill admitted that the Playtech deal was the result of it not having the in-house capability to run online casino games. Commission Chairman Peter Bernhard asked the company if it’s “still at Playtech’s mercy.” William Hill essentially said no, as well as pointed out that it has the option to buyout Playtech in the near future.

Bernhard also expressed “concern” with William Hill once operating in Australia, illegally. Bernhard called it a “sinister perspective” to view William Hill’s strategy as opening its doors first, and then, at a later point, determining whether its business is allowed in the jurisdiction.

The company’s representatives argued that online gaming businesses can’t have perfect compliance records, as the nature of the Internet is fickle. State regulators will grapple with this argument as other offshore-based gaming companies look to gain U.S. entry via Nevada’s openness and economic reliance on the gaming industry.

Ralph Topping. Credit: The Guardian“The U.S. is the most important and interesting to us,” the company’s CEO, Ralph Topping, said of potential new markets.

Regardless of whether or not a federal online gaming bill comes to fruition, policy makers in Southern Nevada are hoping the region can be what Gov. Brian Sandoval called the “nerve center” for Internet gaming. Nevada is the only state that has authorized web poker.

Bernhard said he would like to see companies be “proactive” in their compliance efforts around the world. However, he was critical of the way things were done in the past: “If you rob a bank and just take one teller’s money,” it still isn’t OK, he said. “We have a hard time accepting that.”

With the help of legal counsel in Nevada, William Hill will try to remain compliant with Silver State regulations. William Hill Online, with Playtech, has applied to run online poker. Full investigation into Playtech would happen during that application process, Control Board Chairman Mark Lipparelli said earlier this month.

Commissioner Tony Alamo said Thursday that based on the current information on Playtech he doesn’t have a “warm and fuzzy” feeling. “There are too many holes,” Alamo said.

Topping countered that there hasn’t been “any shred of evidence that there is something wrong with Playtech.” He added that anything negative said about Playtech will have an effect on stock market prices. Both William Hill and Playtech are traded on the London Stock Exchange.

Alamo replied back that it’s his job as a regulator to “vet” potential licensees.

Despite the tension, the nearly three-hour discussion on William Hill ended cordially. “The company has been investigated at extreme depth,” Bernhard said in closing. “I look forward to seeing what [gaming] innovations are to come. It will be a good thing for the state of Nevada.”

“I have my concerns not with the people who are in front of me, but with the people who are not in front of me,” Commissioner John Moran chimed in to make it clear, on the record, that the hearing was really about William Hill, not Playtech.

Follow Brian Pempus on Twitter — @brianpempus

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