Today, the Isle of Man-based gambling software provider Playtech revealed that it has agreed to pay a total of €28 million as part of a settlement with Israeli tax authorities following an official inspection of the company’s accounts for the years from 2008 to 2017.
As explained by the operator, it is to pay the amount of approximately €28 million in the next 30 days, with the payment set to be included as an exceptional item in its 2018 accounts. The company, which in December 2018 issued a warning that the expected changes in the Italian gambling tax law would have a negative impact on its 2019 adjusted core earnings, revealed that Israel had imposed no penalties after the audit.
As the gambling software company explained, the charges were associated with transfer pricing adjustments in relation to some activities carried out by the Group on the territory of Israel in the above-mentioned period.
The agreement was actually reached on December 31st, but the company officially announced it on January 2nd. As mentioned above, the adjustments in Playtech’s taxes come as transfer pricing adjustments for the business of the company in Israel. These have actually been transfers between different parts of the company.
The agreement for the additional tax owed by the company may have come as a result of a simple routine accounts inspection, but it piled more pressure on Playtech, especially considering some of the bad tax news which have already been faced by the gambling software operator.
Playtech Cuts 2019 Adjusted EBITDA Expectations
In November 2018, the gambling software provider revealed that it expected to meet its full-year earnings guidance. At the time, it also warned that it saw prevailing headwinds in Asia in 2018. Playtech posted a projection for the adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) in 2018, saying that the figures would be in the range from €320 million to €360 million.
The company, however, explained that its sales in Asia would probably decline by almost 50%. In order to compensate for the falling revenues in Asia, the Isle of Man-based gambling software company kept its eyes on further expansion into regulated gambling markets across the world.
Last year, it acquired the Italian betting company Snaitech but in late December faced the decision of the local Government to change the gambling tax laws of the country. This led to the company’s warning that it would reduce its 2019 adjusted EBITDA expectations by around €20-€25 million.
The full-year guidance for the company’s adjusted earnings, remained unchanged, as of November.
Playtech, however, got some good news, too. Also in December 2018, the company’s subsidiary Quickspin became one of the first providers which will be permitted to enter the regulated Swedish gambling market. A partnership with iovation was also announced, a well as the official release of the first regulated online casino in Poland.