FSB for sale… but who’s buying?
FSB sale rumors, Flutter reports Tuesday, Inspired’s earnings recap, startup focus – Sports IQ sale +More
Sportsbook backend provider FSB Technology is being touted for sale.
In +More: MGM closes in on Globo partnership.
Flutter reports this coming Tuesday.
Inspired chair says AGS PE takeout was a “clever” deal.
Startup focus looks at the sale of Sports IQ to DraftKings.
I've got the brains, you've got the looks.
FSB up for sale
Give me an F: Sportsbooks backend technology and online gaming PAM provider FSB Technology has been put up for sale by majority shareholder Clairvest, which has hired Oakvale Capital – who else? – to advise on a sale.
Sources close to the process suggested it has four parties interested in buying the company at ~£20m.
The Ontario-based investment house Clairvest gained a majority stake in FSB Technology in July 2019 when it stumped up £23m with an option to pump a further £4m into the company.
Not for us: According to the last annual report available on Companies House, in 2022 FSB underwent a change of strategy with the “de-prioritization” of its US-facing offering. The company subsequently saw the departure of founder CEO David McDowell, who initially stayed on as a director before departing in October 2023, with Adam Smith taking over as chief exec.
The annual report for the year to December 2022 showed FSB generated revenues of £11m, up 19% YoY, and a pre-tax loss of £22.4m, a 60% worsening on the prior-year period.
In and out of Africa: Among its clients, FSB provides backend solutions to UK-facing Fitzdares and Baltics-facing OlyBet. The company also has a number of deals in Africa, including NairaBet, BetLion, BetYetu, Paribet and most recently South Africa-facing SuperSportBet.
The PAM offering could be the element that makes FSB attractive to potential buyers.
A short list: The likes of Kambi (a sponsor of the E+M newsletter) have made no secret that ownership of a PAM remains a long-term aim, while other potential buyers include Genius Group. Yet, FSB isn’t the only sportsbook provider on the market right now, with Sporting Solutions also having had a for sale sign placed on it by owner FDJ.
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+More
Think Globo: MGM Resorts is reported to be close to announcing a partnership deal with Brazilian media giant Globo to launch BetMGM when the market fully regulates later this year. According to Brazilian media outlet SportsMKT, negotiations are at an “advanced” stage.
Dutch launch: The Netherland-facing iCasino operator Betnation has announced its entry into the sports-betting space via a platform deal with Metric Gaming and Bragg Gaming.
Kaizen’s Betano platform is now live in the UK through a partnership with BVGroup.
By the numbers
Indiana: Total GGR was up 1.3% YoY to $208m but was down 7.3% on a same-store basis. OSB was up 26% to $37.1m on handle that rose 23% to $394m.
Iowa: GGR came in at $144m, down 5.9% YoY. Sports-betting GGR rose 17% to $16.5m on handle of $210m, up 21%. DraftKings led with 39% GGR share while FanDuel grabbed 37%.
Illinois: Bally’s temporary property in Chicago saw revenues fall 7% to $10.4m as statewide B&M gaming fell 10% to $137m.
Career paths
DraftKings has appointed Linda Bukata Aiello as its new chief people officer.
Flutter’s Sportsbet has named Michael Foster as chief information officer.
SIS has appointed Peter Camden as competitive gaming product manager.
Caesars Entertainment has appointed Kim Harris Jones to its board.
The week ahead
Flutter Entertainment releases its Q1s on Tuesday. Looking at the state-by-state data, the team at Jefferies said it points to Q1 US NGR growth of 35%, which they suggested represents a slight deceleration against the +56% rate disclosed by Flutter for the first 11 weeks of the period.
“We attribute this to a combination of weaker late-March sports margins and additional North Carolina promotional spend in the final two weeks of the quarter,” the team added.
The slowdown, the team added, is wholly related to OSB, with their tracker showing OSB NGR slowing from 64% growth in the first 11 weeks of the year to 33% for the full quarter.
Contrastingly, iCasino NGR accelerated to 58% NGR growth from 50% for the first 11 weeks, lifted by the closing of a record month for both FanDuel and the market.
Also reporting this week: supplier IGT also updates on Tuesday following merger partner Everi last week; sports data AV and sports trading supplier Sportradar reports on Wednesday along with Codere Online; while Aristocrat reports on Thursday, its first numbers since completing its merger with NeoGames.
Earnings in brief
Inspired Entertainment: Lower service revenue from its UK betting shop machine placements lay behind a 3% YoY revenue decline to $63.1m, while adj. EBITDA dropped by 19% to €16.3m. Inspired’s second-biggest segment, virtual sports, also suffered a decline in revenue and profits, though chair Lorne Weil said the pullback had “run its course” and growth had returned post-close.
Smart thinking: Asked about the private equity buyout of Inspired’s previous target AGS announced late last, Weil said it was “very clever.”
“I think the buyer is going to have a very, very successful investment,” he added.
Endeavor: In its limited Q1 commentary, the soon-to-be-taken-private media and sports giant said its OpenBet and IMG Arena-led sports data and sports-betting tech segment saw revenues fall back 10% to $90.7m due to the loss of key tennis rights to IMG Arena rival Sportradar.
The segment made an adj. EBITDA loss of $9.5m compared to a profit in the prior-year period of $13.9m.
FansUnite: The provider behind Betting Hero said Q1 revenue would come in at $8.2m-$8.4m while adj. EBITDA would be the range of $1.5m-$1.8m. The company will report fully on Wednesday.
Analyst takes – Rush Street Interactive
A fighting chance: After meeting with CFO Kyle Sauers, the team at Macquarie came away impressed with Rush Street’s “disciplined, iCasino-focused strategy,” suggesting it has allowed the company to “punch above its weight in a highly competitive market.”
The team is now forecasting adj. EBITDA profits of $54m for the year and said it is “comfortably positioned for double-digit EBITDA growth annually thereafter.”
They pointed out the momentum extends into Rush Street’s LatAm operations where it will soon be launching in Peru.
More takes
888: The team at Deutsche Bank has initiated on 888 with a Hold, saying its valuation of 8x the online division and 4x the retail estate reflects the fact the company is currently growing slower than peers in its core markets and also has unregulated market exposure.
The team said 888’s 5x-plus leverage meant it is likely unable to engage in “material M&A” while also posing refinancing risks in the next three or four years.
Playtech: DB also initiated on Playtech with a Buy rating, saying that while the Caliente legal dispute and Asian shareholder presence pose issues, the opportunity presented by live casino expansion is “significant.”
SJM: The team at Seaport suggested SJM’s recent Q1s showed improvement despite a continuing “tepid” ramp up at the Grand Lisboa Palace. They added that the long-term return on investment at the property would remain “suboptimal” and, on this basis, the stock remained a Sell.
Venture capital firm Yolo Investments manages in excess of €500m in capital across 100 exciting fintech, gaming and blockchain companies. The Yolo Investments' Gaming fund, regulated by the Guernsey Financial Services Commission, has taken positions in fast-growth suppliers and operators, including Dabble and Enteractive. Yolo Investments (yolo.io) wants to hear from readers of this newsletter. Get in touch with your pitch, or for a chat about innovative products which can plug into our investment ecosystem.
Startup focus – Sports IQ sale
Heat map: The sports data analytics space is one of the hottest areas right now. Banach to PointsBet (and subsequently Fanatics) and Angstrom to Entain remain the headline deals and now Vancouver-based Sports IQ can be added to the list of providers snapped up by operators looking to gain a yard on the competition in the odds provision stakes.
Founder Omer Dor took to LinkedIn to disclose that DraftKings had bought the company he founded in 2018 for an undisclosed sum.
He said Sports IQ was joining a team “whose desire for winning and being the best matches our own.”
Arms race: The news from Sports IQ points to the extent to which operators are now hoping to weapon up in the sports data space, racing to provide their customers with more customized and unique odds offerings. In this instance, it is the provision of proprietary player data that has clearly attracted DraftKings.
Lean on me: During DraftKings’ Q1 earnings call, CEO Jason Robins made much of the company’s product enhancement efforts, including the recent launch of progressive parlays and SGP cashout. Specifically, he said the company continued to “lean in” on product enhancements.
“There's a ton we can do to improve the product that will hopefully be revenue additive and certainly will be competitively differentiated,” he said.
He noted DraftKings was working on “behind the curtain things” that would help it “optimize hold rate and trading.”
The rash of deals where operators have snapped up providers in this area does, however, pose a question about whether being a B2B in the space has long-term viability. Sources suggested more deals are likely as operators continue the search for odds exclusivity.
Growth company news
Kero Sports has teamed up with Novibet for the launch of FlashBets, a “first-of-its-kind in-play experience” that combines live streaming and interactive player chat with Kero-powered micro bets.
As noted last week, player conversion and reactivation services provider Enteractive has secured a new limited and non-controlling investment from Bettor Capital in order to fund a further push into the US market.
Enteractive was founded in 2008 and, according to David VanEgmond from Bettor Capital, has established a global blue chip customer base and market leadership position that has the company “primed for continued growth.”
Calendar
May 14: Flutter
May 15: Sportradar, Codere Online
May 16: Gambling.com, Aristocrat
May 17: XLMedia
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