Troubled Sportsbook Operator PlayUp Faces Financial Difficulties in the US and Australia

PlayUp, a sportsbook operator, is currently experiencing significant challenges in both its native Australia and the US market, with ongoing talks surrounding a potential acquisition.

However, doubts have been raised by former PlayUp employees about CEO Daniel Simic's claim that staff were paid in full. These employees denied receiving their missing paychecks, holiday pay, and severance, which they are legally entitled to. One former employee spoke out, stating, "Not a single US employee has been paid their missing paycheck and holiday pay or severance that they are legally entitled to."

The situation has left employees in uncertainty as they were informed that payroll for the period of 16 to 30 June is expected to be paid "soon." However, there is still no clarity on when the owed money for severance and paid time off will be disbursed, with some employees reportedly owed as much as $45,000. According to a source, as of 21 July, the US staff has not received any payments.

PlayUp's financial troubles have taken a toll on its US workforce, with the headcount now reduced to just two employees. This is a significant drop from a peak of 40 employees in 2021. Staff members were officially terminated on 30 June, with abrupt cut-off of access to email and the PlayUp platform. Despite this, around six employees continued to work without pay, but their numbers have dwindled, and a resolution to the company's struggles is yet to be seen.

While PlayUp's financial challenges extend to its Australian operations, the company has managed to pay its Australian staff in the previous week. However, there are concerns that the struggles have reached a point where PlayUp is now subject to the Safe Harbour law. This law protects directors from personal liability if they demonstrate efforts to restructure the business to avoid insolvency. According to a source, the company's cost-saving measures, such as cutting ties with US staff and restructuring, were implemented to avoid paying debts.

Amidst the difficulties, PlayUp has been engaged in acquisition talks. CEO Daniel Simic expressed that the transaction is in the final stages with an unnamed US-listed operator. The deal reportedly includes a down payment to pay patrons and staff. However, there are uncertainties about whether the deal will ultimately be successful. PlayUp's divestment plans date back to July last year, following a strategic review and failed sale to the cryptocurrency exchange FTX. The company also abandoned plans for a special purpose acquisition company (SPAC) combination.

While PlayUp has yet to confirm the outcome of the acquisition talks, it appears that the company's financial struggles have had an impact on its vendors as well. Several debts to vendors reportedly go as far back as November 2021, with some still awaiting payment. Market access partner Caesars, for example, cut ties with PlayUp over missed payments, though they remain open to renegotiating an agreement.

The situation has led to concerns over PlayUp's options for a potential relaunch in the US market. The company's New Jersey license was recently revoked, and its Colorado site is now in "maintenance mode." Additionally, the Ohio Casino Control Commission denied PlayUp's license application for its Slots+ product, citing it as illegal under Ohio law.

Alongside financial troubles and challenges in its US operations, PlayUp has also seen senior leadership departures. In Australia, group CFO Glenn MacPherson and general counsel Ashley Kerr resigned in the last month. Meanwhile, PlayUp's US Chairman, Dennis Drazin, reportedly stepped down from his role, though he remains involved as an investor and advisor. Former US CEO Laila Mintas, who was previously blamed for a collapsed $450 million sale to FTX, has filed a claim for $100 million in damages from the company. Mintas denied the allegations, and a detailed legal response suggested the deal fell through due to Simic's actions.

With the ongoing financial challenges, uncertainties about the acquisition deal, and legal issues, PlayUp faces a complex road ahead in both its US and Australian operations.

By fLEXI tEAM