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Chinese Group to Pay $4.4 Billion for Caesars’ Mobile Games

Posted by: Caring
Category: Blog

HONG KONG — Gambling may be illegal in mainland China, but that is not stopping Chinese tech investors from betting on casino-style mobile games.

In the most recent example in a growing trend of big deals for smartphone-based games, a consortium of Chinese investors led by the game company Shanghai Giant Network Technology said in a statement on Saturday that it would pay $4.4 billion to Caesars Interactive Entertainment for Playtika, its social and mobile games unit. Caesars Interactive is controlled by the owners of Caesars Palace and other casinos in Las Vegas and elsewhere.

The Chinese consortium — which also includes Yunfeng Capital, the private equity fund of Jack Ma, the chairman of Alibaba — said it would allow Playtika, based in Israel, to continue to operate independently. The all-cash deal, which is expected to close by the end of the year, does not include Caesars Interactive’s World Series of Poker game or its other real-money game businesses.

In recent years, the Montreal-based Caesars Interactive has built Playtika, which it acquired in 2011, into a major player in the world of smartphone-based casino-style games. While many of Playtika’s games, like Slotomania and Bingo Blitz, are free to play, users can also pay for virtual currency and items to enhance play. The virtual currency used in Playtika games will continue to be not exchangeable for real money, according to the statement.

While it is not clear when or whether Chinese regulators will accept gambling-style games, the Chinese investment is an example of how internet companies in China often invest first and then worry about legal restrictions. It is also a sign that investors are willing to pay increasingly large sums for smartphone games, which have proved to be one of the best ways to make money from users.

In June, the Chinese internet giant Tencent said it would pay $8.6 billion for a controlling stake in the Finnish game maker Supercell, which makes the popular smartphone game Clash of Clans. Late last year, the American video game powerhouse Activision Blizzard said it would pay about $6 billion for King Digital, maker of Candy Crush.

While social networking apps may be more popular, mobile games like Clash of Clans and Candy Crush are some of the most profitable apps around. In China, where playing games on a smartphone can often stand in for other entertainment, like going to a movie, technology companies have competed intensely to lure players and the spare change those players are willing to spend on games.

For Shanghai Giant Network Technology, acquiring Playtika will also extend its reach beyond China. Other Chinese tech companies have used deals to reach players around the world. Among them is Tencent, which has gained control over internationally well-known games like League of Legends.

Last year, one of Caesars Interactive’s parent companies, Caesars Entertainment, filed for bankruptcy protection. It has been working to get creditor backing for a plan to restructure.



Author: Caring