Cryptologic and Marvel Dispute in Open

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Cryptologic regularly issues press releases to inform all concerned about the latest developments taking place in the organization. On April 16, 2010, one such press release was issued titled "Notification of Arbitration Proceedings". The title belied the storm in the contents of the notification. Cryptologic a publicly listed company operating globally and things could have gone wrong in any aspect of its functioning. No one would have imagined that the arbitration proceedings have been initiated against a name that is so closely associated with Cryptologic that it is in some ways synonymous.

The press release said, "Cryptologic Limited … announces that arbitration proceedings have been formally commenced by Wagerlogic Ltd. (a wholly owned subsidiary of Cryptologic Limited) against Marvel Enterprises Inc. and Marvel Enterprises B.V. (collectively "Marvel"), under the JAMS Comprehensive Rules in New York City, USA." The press release further said, "These proceedings concern Wagerlogic Ltd.'s claims that Marvel has committed material breaches of certain provisions of its agreement with Wagerlogic Ltd. relating to the licensing of Marvel comic book characters to Wagerlogic Ltd." Cryptologic did not spell out what these "material breaches" were but clarified that it had tried to resolve the matter without resorting to arbitration. However since no resolution was arrived at, Cryptologic was left with no alternative but to initiate arbitration proceedings against Marvel to protect its licensing rights and commercial interests. Wagerlogic is the subsidiary of Cryptologic that actually develops the software for the games.

This notification seems more of a legal requirement than a desire to inform. And since no details have been made public by Cryptologic one can only conjecture as to what could have gone wrong with what appeared to be the most enduring partnership in the online casino industry. From 2005 to December 2008 Cryptologic released 17 online slot games based on Marvel Comics superheroes. These include Spiderman, The Incredible Hulk, Blade, Elektra and X-Men. In the last 12 months or so, more than 20 online gaming operators that are not powered by Cryptologic have entered into licensing agreements with Cryptologic for offering some of these games at their casinos. And these are the biggest gaming operators in the industry like William Hill, Ladbrokes, 888 and Paddy Power.

In retrospect one can look at where things may have gone wrong. Cryptologic has not released a Marvel slot game since December 2008. In February 2009 Cryptologic signed an agreement with Marvel's rival DC Comics for developing slot games based on their superheroes. Accordingly Superman, Batman and Wonder Woman hit the reels by the end of 2009. In March 2009 Playtech had announced an exclusive deal with Marvel Characters B.V., a wholly owned subsidiary of Marvel Entertainment Inc., to develop online slot games based on Marvel's motion picture brands. In the last few months Playtech has released five Marvel Movie slot games based on superheroes already featuring in Cryptologic Marvel Comics slot games.

But all these issues lost relevance when in June 2009 Cryptologic and Marvel announced an extension of their agreement till the end of 2013. At that time Brian Hadfield, Cryptologic's President and CEO, had said, "It's exciting to extend a deal that has been mutually successful and profitable, and to strengthen Cryptologic's competitive advantage in the branded gaming space." Simon Philips, President, Worldwide Consumer Products for Marvel Entertainment had said, "They [Cryptologic] have proven they are able to translate Marvel's world renowned Super Heroes into hugely successful Internet casino games and we are confident they will continue to fully leverage these properties on a global level."

So what has gone wrong since then? The coming weeks will tell.

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