DraftKings keeps it Simple
Micro-betting provider the next M&A target, Star Entertainment’s wild week, Better Collective’s Google pros and cons +More
DraftKings is rumored to be buying Simplebet.
In +More: Bluberi financing, BettingJobs’ Jobsboard.
Shares watch looks at Star Entertainment’s up and down week.
Better Collective suffers Google-related share price drop.
Sector watch looks at the Saudi involvement in esports.
Moving with a simple twist of fate.
DraftKings ‘closes in’ on Simplebet
Keep it simple: DraftKings is on the verge of acquiring micro-betting provider Simplebet, as it looks to further augment its same-game parlay product, E+M can reveal. Multiple sources suggested a deal is close, with the sum rumored to be anywhere between $120m and $170m.
Sources indicated the final sum would also be dependent on earnouts related to product landmark achievements.
Neither company responded to enquiries from E+M.
Selling short: The question of price is also complicated by DraftKings’ 15% ownership of Simplebet, which it secured when it became the provider’s biggest client in August 2021. It is thought DraftKings now accounts for ~60% of Simplebet’s turnover, followed by Hard Rock and bet365.
A further complication is that the sale price is likely to be below the $210m valuation the VC-funded Simplebet previously achieved via its $28.6m Series C funding round completed in 2021.
The round was led by Sprint VC and Jake Paul’s Anti Fund.
However, that was succeeded by a debt financing amounting to $9.49m, which, according to a filing with the SEC, came in October last year.
Rack ‘em: A deal for Simplebet would follow hot on the heels of the Sports IQ buyout DraftKings announced earlier this month. Despite the amount not being made public, sources suggested the deal was priced at $50m-$70m.
Ball park: Simplebet said just this week that it had seen a 120% increase in handle on MLB micro bets in April.
Deal talk
All over it: Specialized odds provision and trading capability remains an area of keen interest.
Banach Technology was snapped up first by PointsBet for $43m in April 2021 and subsequently sold as part of the sale of the US business to Fanatics.
Angstrom was sold for up to $203m to Entain in July last year.
SportCast was acquired by OpenBet in May 2021 for an undisclosed sum.
On the shelf: The flurry of deals in the area leaves few B2B providers, with those left including Swish Analytics, Huddle and a new entrant in the space in GamePLAI.
Layers: Questioned why DraftKings would need to add Simplebet having just bought Sports IQ, sources suggested that while the latter has the player props capability the former can bring the micro-markets architecture.
There was less agreement from experts spoken to by E+M on the question of whether DraftKings would be able to marry together the two tech platforms.
“That will be the tricky part,” said one.
Done deal: The rumors around Simplebet come as DraftKings announced just yesterday the completion of its $750m Jackpocket acquisition. The company said it expects Jackpocket to generate $60m-$100m of adj. EBITDA starting in 2026.
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.
+More
Bluberi picking: Nevada-based slot machine and gaming content provider Bluberi has announced it has closed a $55m financing facility with a consortium of lenders led by Citizens Bank.
Kambi has proposed a new share buyback program to authorize the acquisition of up to 10% of the total shares in the company.
Golden Nugget Online Gaming is live with EveryMatrix iCasino content in Michigan and New Jersey. Meanwhile, Supremeland iCasino games are now available in New Jersey through a partnership with EveryMatrix.
Jelly on a plate: The slots studio Jelly Entertainment will supply its online games to Light & Wonder in the UK, Spain and Italy.
SIS is expanding into Africa through a partnership with Bitville Gaming.
Read across
In Compliance+More, the UK’s land-based casino sector has had victory snatched from its jaws this week after the government announced a snap election set for July 4, sinking hopes of any enactment of the proposals announced last week to increase machine numbers in certain casinos from 20 to 80 on the statute books.
In The Token Word, Web3 gaming network Gala Games admitted to a hack of its smart contracts that allowed the perpetrator to mint $220m of tokens and sell on $21m-worth before the exploit was noticed and quickly shut down.
Head of Marketing – Bulgaria
Head of Product – Poland
Sportsbook Product Director – Costa Rica
Shares watch – Star Entertainment
Catch a falling Star: The troubled Australian casino operator had one of the more bizarre weeks after it first reported it had been approached by representatives of Hard Rock International, only for the latter to threaten legal action against those spreading unfounded rumors of its involvement in any putative bid.
Such was the confusion caused that Star’s share price rose 20% on the news of the announcement only for it to give up almost all of the ground gained when Hard Rock issued its disavowal.
Will the real Hard Rock please stand up? As a Bloomberg story reported, the confusion appeared to stem from Star saying a group backed by Hard Rock Hotels & Resorts (Pacific) had made the approach. Star itself is currently all but leaderless and is seeing its corporate reputation shredded by a second inquiry into its business practices in New South Wales.
The wire service said the exact identity of Hard Rock Hotels & Resorts (Pacific) “isn’t clear.”
It added that a company named HPL Hotels & Resorts Pte Ltd. runs at least three Hard Rock-branded hotels in Southeast Asia, in Bali, Pattaya and Penang.
A company website says HPL Hotels & Resorts is wholly owned by a Singapore-listed entity.
🎢 Wild ride! Star Entertainment’s up and down week
Collective responsibility
In media res: As with Gambling.com before it, Better Collective insisted it could still win out from Google’s recent implementation of its new rules on third-party content. The sports media group suggested an “additional consequence” has been improved rankings for its own proprietary sites, resulting in increased traffic.
CEO Jesper Søgaard said it was too early to comment on what the mid- to long-term effects of the change might be.
Still, the soothing words weren’t enough to stop investors dumping the stock, which was down over 17% on the week.
😱 Better Collective investors get the feast on Google worries
School of hard knocks: Søgaard was speaking after Better Collective reported Q1 numbers that showed revenue up 8% to €95m, albeit with organic growth of negative 6%. Adj. EBITDA was also down by 13% to €29m. The company blamed tough comps for the shortfalls.
Despite the success of the launch in North Carolina, North American revenues also declined by 8% to €34m. Europe and the RoW segment rose 20% to €61m.
Ace face: Since period close, Better Collective has acquired UK-focused bet calculation tool provider AceOdds for €42m including earnout. Søgaard said the buyout “fits very well” with the company’s strategy of owning “different kinds of media.”
👀 Meanwhile, rival Catena Media announced that Better Collective has cut its holding in the company by half. BC now controls less than 5% of Catena compared to 9% previously. Catena’s share price fell 2.5% yesterday.
Playtech trading update
Mexican standoff: There appears to be no further progress made in the legal dispute with major strategic partner Caliplay in Mexico and, while Playtech said the business remains a “highly important customer” and dialogue between the two continues, the fees owed to the company remain “uncollected.”
Playtech said it “believes it has visibility” over “substantially” the revenue generated by Caliplay’s business and “as such can confirm that Caliplay continues to perform strongly.” However, the statement added it has been unable to obtain full financial information from Caliplay during the period.
Hence, the revenue generated from the additional B2B services element of the agreement is “partly based on an estimation, which takes account of prior trends and information provided.”
ABCs: Without giving any figures, Playtech said the B2B arm had performed “well” in the first four months of the year. It added that live iCasino had delivered “solid growth.” In B2C, meanwhile, Snaitech in Italy had performed well despite the well-flagged issue with sporting results over the first part of the year.
Earnings in brief
NorthStar Gaming: The Canadian online gaming operator said revenue rose 63% YoY to C$5.6m ($4.1m) in Q1, helped, it said, by growing brand awareness enabling it to spend its marketing dollars more efficiently. Recall, the company recently received a further C$3m in financing from major shareholder and strategic partner Playtech.
PointsBet provided upgraded FY24 EBITDA guidance this week off the back of continued strong H2 trading and increased operational efficiencies. The company said losses for the year would now come in between A$4m ($2.6m) and A$6m versus a previously predicted loss of A$9m-A$14m.
SharpLink Gaming: Now focused on being a pure-play betting and gaming affiliate, SharpLink said revenues fell 21% YoY to $976k. The company sold its Sports Gaming Client Services and SportsHub Gaming Network businesses to RSports Interactive for $22.5m during the quarter.
Acroud: The gaming affiliate sold its poker assets over the quarter, saying the “strategic move was made in light of poker’s declining popularity” as well as the SEO challenges. Revenues were flat for the quarter at €9.5m but adj. EBITDA was down 42% YoY to €1.2m.
EveryMatrix delivers iGaming software, solutions, content and services for casino, sports betting, payments, and affiliate/agent management to 300+ global Tier-1 operators and newer brands. The platform is modular, scalable, and compliant, allowing operators to choose the optimal solution depending on their needs.
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Analyst takes – AI in gaming
Ready, willing and able: The team at Jefferies pointed to Light & Wonder, DraftKings and Red Rock Resorts as three examples of companies within the gaming space where AI capability is already being explored and exploited.
For LNW, the team said CTO Victor Blanco has been leading the AI initiative and has been “looking for efficiencies in some of the more manual tasks to help maximize efficiency in the process.”
At DraftKings, meanwhile, Jefferies noted that former CFO Jason Park has now become the effective CTO and is “looking for AI to be a larger focus of the business.”
“Having the most advanced technology in the competitive OSB market could drive differentiation over time,” the team added, with the obvious opportunity lying in the area of customer service.
Lastly, at Red Rock, the team stated the Las Vegas locals operator has been implementing early-stage strategies to “leverage the use of AI to manage costs, optimize staffing levels, manage inventory and streamline processes.”
Sector watch – esports
No Rivalry: Rivalry continued to show top operators that there’s money to be made if you use esports as a strategic pillar and don’t just throw money at a buzzword. The company reported 82% handle growth to C$423.2m ($308.2m) in FY23 and C$35.7m GGR, helped by the launch of Gen Z-first original slots. iCasino GGR growth was up 92% YoY, representing 52% of total handle.
The company eyes expansion into the crypto market, as well as continued geographic expansion to broaden TAM.
See more on this in next week’s The Token Word, which features an interview with Rivalry CEO Stephen Salz.
Esportswashing? Saudi Arabia has continued its aggressive play to become the go-to destination for esports and video games. The debate around sportswashing has quickly moved to the esports space as the Middle Eastern powerhouse continues to throw money at anyone that’ll have it.
I Qiddiya not: The 2024 Esports World Cup has been announced, with a record-breaking prize pool of over $60m up for grabs across a multitude of game titles in Riyadh in July. Saudi Arabia’s Public Investment Fund backs the Savvy Gaming Group, which acquired ESL and FACEIT, two of the largest esports tournament organizers.
PIF also owns Qiddiya, a massive real-estate project, which has coincidentally become a three-year sponsor of the Esports World Cup.
The former chair of the now merged ESL FACEIT, Ralf Reichart, is CEO of the Esports World Cup Foundation.
Road to Riyadh: Given Saudi’s aggressive expansion in both sports and now esports, the notion of gambling sponsorship being on the table in the future is far from off the table.
Many of the teams that are heading to Riyadh to compete have gambling sponsors already signed on multi-year deals, so only time will tell what the broadcasts shall and shall not display when the competition takes place.
Calendar
May 30: Rivalry
Jun 6: Gaming in Holland
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