Gaming companies step up the action


There is an economic change happening. First of all, it started with the fall of Professional and Amateur Sport Protection Act (PASPA) in May 2018. When the law was overturned, it made sports betting accessible to the masses at the state-by-state level.

But it did something more. It allows companies like DraftKings and FanDuel, which at the time were strictly everyday fantasy sports companies, to pivot their business models to enable sports betting. The infrastructure was there, the user base was there, and with the flick of a switch, some fantastic sports players started to become sports bettors.

Then the economic gears started to turn. What if an online gaming company, without a physical presence, became a publicly traded company?

In the past, gaming stocks were dominated by the casino industry. Las Vegas Sands, Wynn Resorts, Caesars Entertainment are the big names, the big brands that dominate Wall Street.

That was until DraftKings took their online gaming business and turned it into a publicly traded company.

Mergers and acquisitions aren’t the sexiest things to talk about. But it’s essential to look at what gaming stocks were and how they evolved.

Will the trend of IPOs for online games ever stop?

Chad Beynon, Senior Gaming and Hosting Analyst with Macquarie Research, anticipates a reduction in the number of online game companies that go public.

“We looked at mature markets like UK and Australia, and in those cases there are four or five winners, then you have a number of different players like Italy and other European markets. “Beynon said. PlayUSA in an interview. “Most expect the United States to have five big winners, then everyone.”

At Macquarie, where Beynon has spent the past 14 years as a Wall Street analyst, he describes the online gambling market‘s hierarchy of power as a multi-level structure.

“If we look at the big land-based companies in the United States, you have MGM, Penn National, and Caesars Entertainment. These are the big three in terms of income and profit. They all have a really solid online strategy.

“Then look at the next level, Wynn Resorts and Las Vegas Sands. Then the next level – Boyd Gaming, Churchill Downs. Looks like everybody wants this [robust online] strategy.”

As Beynon explained, sports betting companies will secure around ten% of market share. So if each of the operators mentioned above secures its share of the kingdom, what remains?

“It’s all about omnichannel, point consolidation with online options. You see this in the hotel and airline industry, where you can redeem your points for other things. You have omnichannel that pairs with media companies, podcast, television, or even print space. “

While the United States may be reaching its market cap – number of in-house sports betting companies – Beynon believes data and tech companies, which are more B2B, still have a role to play.

We may never see a new casino company emerge or a new sports betting company emerge. But what we will see is that these entities grow and rush into a game of domination. As Beynon said, there will always be room for data companies. The business that can catalog and distribute information like betting lines the fastest will continue to be successful.

“There are more companies, there are tech companies, data companies, etc., they can go public with better margins and get a portion of all the revenue,” he said. “But from a B2C like DraftKings & Co., at some point there will be a reduction. The end of new sports betting companies might be soon, but data companies can still happen. “

Tracking PlayUSA mergers and acquisitions

To catalog all the moving parts in the ever-changing gaming landscape, PlayUSA created this tracker to help bring order to chaos.

Not all offers are listed below. Instead, we’ve taken brand name, market value, and broad reach into account and compiled a list of the top 10 most impactful M&A deals over the past few years.

  1. Diamond Eagle Acquisition Corp. acquires DraftKings + SBTech: the original seed, the one that started it all. DraftKings and SBTech were acquired by Diamond Eagle for a huge $ 2.7 billion in cash and in shares. Since then, online gaming operators have attempted to replicate the success of DraftKings.

  2. Penn National Gaming acquires stake in Barstool Sports: for $ 163 million in cash and in shares, Penn National acquired a 36% stake as a bar stool. In addition, after three years, participation increases to 50%. Penn CEO Jay Snowden said the acquisition was part of a strategy to evolve into a “best-in-class” omnichannel betting and gaming operator.

  3. Caesars Entertainment acquires William Hill: The deal gave Caesars a unified portfolio and customer experience for online casino and sports betting operations. This too greater market access guaranteed for Caesars and the ability to cross-sell to 60 million Caesars Rewards customers. All that for $ 3.7 billion in liquid.

  4. DraftKings acquires Golden Nugget Online Gaming: the acquisition would be help DraftKings reach iGaming customers who do not bet on sport, said Jason Robins, CEO of DraftKings. The $ 1.56 billion equity deal will also Tilman Fertitta, CEO of Golden Nugget one of DK’s largest shareholders when the deal closes in 2022.

  5. Flutter Entertainment becomes majority owner of FanDuel: in 2018, Flutter Entertainment – then Paddy Power Betfair – allocated its US assets more $ 158 million in cash for a 58% participation in FanDuel. Two years later, the company passed $ 4.2 billion buy the rest 37% – Boyd Gaming owns the remaining 5%.

  6. Bally’s Corporation enters into agreement with Sinclair Broadcast Group: in a case that is worth $ 85 million over 10 years, Bally’s was able to rename the 21 Fox Regional Sports Networks to Bally Sports. The company is also licensed to embed content on the 190 television stations owned by Sinclair.

  7. Penn National Gaming acquires Score Media and Gaming Inc.: theScore is the third most popular sports media app in North America and the first in Canada. For $ 2 billion in cash and in shares, Penn National further strengthens its media and gaming strategy.

  8. Caesars Entertainment merges with Eldorado Resorts: the combined wallet account for 60 properties in 16 states, with the transaction valued at $ 17.3 billion. The merger focused on sports betting and online gaming and, when combined, expanded to seven states and count.

  9. Bally’s Corporation acquires Monkey Knife Fight: Bally’s goal is to become the first “truly vertically integrated” online gambling company in the United States. Part of this strategy was to offer sports betting, online casino games and daily fantastic sports. The acquisition of fantastic sports operator only the cost $ 90 million in stock.

  10. DraftKings acquires Vegas Sports Information Network, Inc. (VSiN): which can $ 100 million get you – how about 18 hours of live sports betting content per day Streamed via video and audio channels including Comcast Xfinity, Sling TV, FuboTV, iHeartRadio, and TuneIn.

This is a revolving door that could see companies go up or down depending on future deals.


About Author

Comments are closed.