PlayUp Faces Uncertain Future as CrossBet Acquisition Looms
PlayUp Approaches Critical Decision Point Amid Financial Struggles
PlayUp is on the verge of a significant turning point as it continues to grapple with ongoing regulatory and financial difficulties. Recent reports indicate that shareholders will have the final say on December 10 regarding the proposed sale of PlayUp’s Australian gaming assets for AUD 18.6 million (approximately 12.11 million USD) to CrossBet. This announcement was formally communicated to investors on November 10, setting the stage for a decisive vote on the asset sale.
Historical Challenges Hampering PlayUp’s Progress
The proposed deal confirms longstanding speculation that PlayUp has been in discussions with mid-sized operators about a possible acquisition. Among the candidates, CrossBet has emerged as a frontrunner due to the potential benefits a merger could bring both companies. For PlayUp, this acquisition could be a vital solution to ease mounting financial strains and regulatory pressures.
PlayUp’s troubles have been well documented, with a notable example being the failed $450 million sale of its U.S. operations to FTX in 2021. The cancellation of that deal sparked intense legal disputes between CEO Daniel Simic and former U.S. head Laila Mintas, with allegations of deal sabotage. Although the court dismissed these claims earlier this year, Mintas’s counterclaims remain unresolved, posing ongoing risks for PlayUp.
Insider reports suggest that Mintas may prevail in legal proceedings, potentially leading to significant financial liabilities for PlayUp. Meanwhile, the company’s ambitions in the U.S. market have largely faltered. The revocation of PlayUp’s sportsbook license in New Jersey forced the company to cease operations there, followed by similar restrictions in Colorado—both moves severely curtailing its U.S. growth potential.
Shareholder Backing and Regulatory Pressures Shape the Deal
In Australia, regulatory setbacks have compounded the company’s challenges. Earlier this year, New South Wales authorities fined PlayUp a record AUD 600,000 (about 391,000 USD) for breaches involving illegal promotions. Investigations revealed that the company offered prohibited account-opening bonuses and targeted individuals without betting accounts, actions outlawed under NSW legislation.
Key shareholders, including Richard Sapford and Daniel Simic, who collectively hold nearly half of PlayUp’s shares, are anticipated to endorse the sale. However, investors must acknowledge that the proposed price is considerably lower than what PlayUp might have commanded under more favorable conditions. Despite its debts, the Australian segment of PlayUp still generates annual revenues close to AUD 40 million (around 26.04 million USD).
Under the terms agreed with CrossBet, the purchaser will take on AUD 8 million (approximately 5.21 million USD) of liabilities owed to sporting organizations, governmental bodies, suppliers, and employees. The remaining AUD 7.5 million (close to 4.88 million USD) will be repaid by CrossBet in installments of AUD 125,000 (approximately 81,300 USD) over five years. This repayment plan, however, relies heavily on PlayUp managing to avoid insolvency after its primary source of income is sold.
