Playstudios Is Sued, Faces Call for New CEO After Game Debacle

(Bloomberg) -- Playstudios Inc., an online gaming company founded by Las Vegas veterans, was sued by a shareholder and faced a call from another for its chief executive officer to resign after halting work on a highly touted game.

Christian Felipe, an investor, filed suit Tuesday in San Francisco federal court, accusing Playstudios of misleading shareholders about its new game Kingdom Boss. Stephen Cloobeck, another investor, released an open letter the same day demanding the board remove CEO Andrew Pascal, as well as his management team. Cloobeck cited “inflated revenue projections,” adding that the company wasn't forthcoming “about the bungled release of its Kingdom Boss game.”

Asked about the timing of his letter and the lawsuit, Cloobeck said in an email: “It signifies there are many other very upset shareholders.”

Playstudios declined to comment.

Kingdom Boss was a departure for the company, which typically makes casino-like games that allow players to earn points redeemable for free hotel rooms, meals and other perks. The new game was a fantasy-like, role-playing title, designed to capture a new, but fast-growing audience for such games. 

Playstudios said the game would be released in 2021 and result in significant revenue, according to the suit. Dissatisfied with the results, however, the company said in February it was suspending work on the game and would take a write-off. 

“We feel that it has the potential, ultimately, to be reconstituted at some point,” Pascal told investors. “We just aren't in a place where we can make that decision yet.”

Pascal, a former Wynn Resorts Ltd. executive, co-founded the company. Former MGM Resorts International CEO Jim Murren sits on the board, after merging it last year with Acies Acquisition Corp., a special purpose acquisition company, which he helped sponsor. 

Playstudios closed at $4.84 on Wednesday, down 52% from Acies' initial offering price in October 2020.  

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