"The Chinese are said to have an insatiable demand for gambling. Playtech is betting on just that after tying up a deal with Sino Strategic International (SSI), an Australia-listed investment group, to help to forge its entry into the market.
Under the five-year deal Playtech’s software and systems will be launched across 600 outlets in Shanghai to allow Chinese punters to play Texas Hold’em Poker.
The computer-based systems allow users to play against real players remotely, with Playtech and SSI both taking a slice of the revenues.
The deal marks a further push into Asia for Playtech, which already runs the online poker operations of Paddy Power, Victor Chandler, Bet Fred and Bet365. Combining smaller poker sites improves the experience for their users by allowing them to compete against more players.
While the Playtech deal could see strong interest, the gaming group is also hoping that the Chinese will start betting on traditional games such as mahjong, of which there are thought to be about 350 million active players. That would be the real boon for investors, as the company would be the first to invite online bets on traditional Chinese games.
The launch is limited to a tiny, albeit wealthy part of the country but could, if successful, allow the company to persuade other regions to grant approval for similar programmes. The Chinese market for such games is untested, but the potential could be huge.
Playtech has no exposure to the troubled US market. It cautioned in October that the state of the US market could set it back a year financially, wiping about 100p off the shares, but they have since recovered most of that ground. Trading on 14 times 2007 forecast earnings the shares, up 10½p at 235p last night, look good value. "
Buy.
SSI Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
