An Australian sports betting company breaking into the enormous US market has become embroiled in legal action with a key American executive, accusing her of scuppering a $600m sale to a Bahamas-based cryptocurrency firm founded by the world’s richest 29-year-old.
Privately held PlayUp, which has sports betting licences in New Jersey and Colorado and fantasy sports operations in Australia and New Zealand, was on the verge of a $US450m ($624m) sale to Sam Backman-Fried’s FTX crypto exchange late last year.
The deal would have put PlayUp’s Sydney-based chief executive Daniel Simic – who in 2017 resurrected the company brand after the sports technology business burnt through $100m of high-profile investor funds and ex-prime minister Malcolm Turnbull swapped his equity for debt before its collapse – on the path towards the ranks of The List – Australia’s Richest 250.
But in sensational claims recently aired in a Nevada court, PlayUp accused its US chief executive, Laila Mintas, of threatening to “burn PlayUp to the ground” and ultimately causing the FTX sale to fall through.
PlayUp claims Dr Mintas, while renegotiating a new contract, demanded her $US500,000 annual salary be doubled, her minority stake in the company rise to up to 15 per cent, and that Mr Simic be terminated and replaced by her, at about the time the company was negotiating a potential sale to FTX.
According to a lawsuit filed by PlayUp in Nevada, Dr Mintas is alleged to have sabotaged the deal by contacting Backman-Fried to warn him against pursuing the PlayUp deal and tell him that there was “conflict within management of PlayUp …[and] systemic issues, and that the company is not clean”.
Backman-Fried founded FTX just three years ago, but his wealth has been estimated at more than $US22bn by Forbes. FTX has been keen to break into the burgeoning US sports gambling market, which is rapidly opening up after decades of being banned across most states, and saw PlayUp as an ideal vehicle for the strategy.
PlayUp filed for a preliminary injunction against Dr Mintas, which was temporarily granted in December before being overturned earlier this month after the US District Court in Nevada had the opportunity to hear her counter-evidence.
Dr Mintas has strongly denied PlayUp’s allegations. A statement sent to the Weekend Australian by her lawyer Jennifer Braster of Naylor & Braster said: “Dr Mintas will continue to fight vigorously against the remaining claims and prosecute her counterclaims for fraud, abuse of process, and defamation, among others.”
In a twist, PlayUp announced on Friday that FTX had agreed to invest $US35m into the company, which would primarily be used to accelerate PlayUp’s US market growth. FTX head of product Ramnik Arora said: “We are delighted to have an investment in PlayUp (and) we believe PlayUp is at a pivotal moment in its corporate journey.”
PlayUp has had a colourful history. Its former owners and all-star board, featuring the likes of Nick Greiner, Bob Mansfield and billionaire Bruce Mathieson, once planned to break into the Chinese sports gambling market.
It raised $100m from investors such as Turnbull and his son Alex, rich listers including Allan Myers and David Paradice and sports stars like cricketers Steve Waugh and Adam Gilchrist. But the business spent far too much money on staff and opening offices around the world while building its own software. By January 2016 its parent company Revo Pty Ltd was in liquidation.
Mr Simic, a Sydney entrepreneur, purchased secured debt in Revo from Alex Turnbull, after many PlayUp staff went without wages and superannuation. He received PlayUp intellectual property, software and social media pages and apps, and re-established the company as a daily sports fantasy sports website aimed at Indian sports fans.
More recently PlayUp has broken into the fast-growing US sports betting market, establishing a sports betting brand in 2019 after acquiring five Australian betting platforms.
PlayUp last year completed a $12.5m private capital raising to fund its US expansion, and now counts the likes of bookmaker turned gambling investor Tom Waterhouse and Matt Davey, the biggest shareholder in ASX-listed BetMakers Technology, as investors.
It has been growing quickly in America, where Dr Mintas, a veteran of the sports betting industry, was appointed US CEO in late 2019. PlayUp has high hopes to break into several new markets in the US and is preparing to launch a new online casino and games offering in New Jersey, followed by Pennsylvania and then several more US states later in the year.
In court documents, Dr Mintas claims that PlayUp was worth less than $US50m when she started – when Mr Simic allegedly told her the company was headed for a stockmarket float – and that she took a below-market salary because PlayUp could not afford to pay her more. She also invested $US1.2m of her savings in the company and was able to strike deals and access new markets to expand the business.
FTX was introduced to PlayUp last August, with Dr Mintas claiming it was at first only interested in acquiring the American business until she convinced them to buy the entire company. She claims she was told by FTX management she was the “jewel of the company”.
FTX made a $US450m offer for PlayUp and a data room was set up, all of which was happening while Dr Mintas was negotiating an extension to her contract that was set to expire on November 30.
Dr Mintas says Mr Simic agreed to an extension and a new $US1m annual salary but stalled on formalising her contract while negotiations with FTX continued, including a trip to the Bahamas by PlayUp executives in early November.
Only days later, Dr Mintas claims Mr Simic demanded another company – online gaming token firm PlayChip, which he and other PlayUp directors control – be added to the FTX deal with a $US105m price tag. In addition, he allegedly wanted FTX to pay PlayUp an additional $US65m in staff incentives.
Relations between Mr Simic and Dr Mintas quickly soured. Both would later meet with FTX separately in the Bahamas, with Dr Mintas claiming FTX wanted to keep her on, running PlayUp’s US business.
She also claimed that FTX told her Mr Simic had presented a list of Australian ‘‘key employees’’ that must be retained by FTX for “hefty salaries” of more than $1m to “stay motivated”, including his brother.
“They (FTX) also referred to Simic as ‘dodgy’ and did not want to deal with him,” Dr Mintas said in court documents.
Mr Simic and PlayUp management were meanwhile becoming more concerned about Dr Mintas’s new salary demands, including doubling her existing deal and increasing her stake in PlayUp to 15 per cent.
The demands would ultimately be rebuffed and PlayUp alleges Dr Mintas took revenge by contacting FTX founder Bankman-Fried to make her allegations.
PlayUp alleges Dr Mintas’s actions led to the abandonment of a deal to sell the entire company to FTX. Dr Mintas, according to PlayUp’s court filings, “purportedly threatened to damage [PlayUp’s] reputation to gaming regulators, commercial and business trading partners, and customers.”
Legal documents lodged by PlayUp claim Dr Mintas told Mr Simic she would “burn PlayUp to the ground” without a new contract on her terms, including being installed as global CEO instead of Mr Simic. Dr Mintas has claimed she had “tried in vain” to salvage the FTX deal.
PlayUp sued Dr Mintas in Nevada in early December, arguing she had breached “confidentiality, non-competition, non-solicitation, and non-disparagement provisions” in her contract, with District Court Judge Gloria Navarro granting PlayUp a temporary restraining order.
In a preliminary injunction hearing earlier this month, PlayUp’s lawyer Douglas Tumminello, of Lewis Roca, claimed Dr Mintas was acting as if “she is the only fireman who can come out and put out that fire and save it all, and she would only do that if the company agreed to the terms of her compensation agreement”.
Dr Mintas has denied making the comments about burning PlayUp down and says she has been made a scapegoat for the original FTX deal collapsing.
Instead, she says it was Mr Simic’s actions that led to the deal being called off and put forward evidence of an email sent by product head Ramnik Arora of FTX alleging confirming her dealings with the crypto firm had no impact on the acquisition. “After much consideration, we’ve decided against a full acquisition. There are a few concerns from our side,” the email sent on November 24 allegedly states.
Earlier this month, PlayUp’s injunction against Dr Mintas was overturned by Judge Navarro, who said: “The plaintiff has failed to demonstrate that the defendant breached the non-disparagement provision under the employment agreement.
“I think it‘s clear that Dr Mintas has now successfully demonstrated that it was just as likely or more likely that the actions of Daniel Simic are the ones that caused the negotiations to cease irreparably.”
The judge also said that “the parties clearly in this case … would benefit from a settlement mediation type of meeting.”
Dr Mintas has filed for damages and claims the case has caused “irreparable harm to her reputation, loss of income, devaluation of her shares”.
Mr Simic would not comment directly on the case, but said it was “business as usual” for PlayUp as it strives to grow in the US.
He also stressed the importance of FTX agreeing to invest anyway: “We are very happy with the progress of our US market entry. The recent investment by FTX will assist PlayUp in accelerating its US market opportunities and grow our global sports betting and wagering presence.”
The case is still making its way through the Nevada legal system and a case management hearing is scheduled in the Federal Court in Sydney on February 4.
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