Kissing frogs
Supply side M&A chatter gets louder
Kambi and OpenBet rumors dominate industry chatter.
In +More: MGM Resorts’ upsized notes offering, Betsson cans Colorado.
Earnings latest from Opap and Intralot.
The startup focus is game provider Omnigame.
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Deal talk
In flux: Kambi is the latest name in the betting and gaming supply space to be subject to rumors surrounding its future, as the current spate of consolidation within the betting and gaming supply space continues.
According to multiple sources an approach has been made to the Stockholm-listed sportsbook backend supplier by the US-listed Genius Sports.
A buyout would enable Genius to expand its own managed trading offering.
Neither Kambi nor Genius Sports responded to E+M’s inquiries.
Dollars and sense: Investment sources suggested a deal from a financial perspective would “make sense” if it were pitched at around a 30% premium to the current Kambi share price of SEK115 ($11.16).
At the current market cap of SEK3.59bn or ~$350m, this suggests a bid would need to be in the region of $450m.
One source suggested any offer would likely be in the form of 50/50 cash and shares.
In FY23 Kambi generated revenues of €173m and EBITDA of €56.6m, while in Q2 revenues rose 7% YoY to €45.7m.
Its forecast for 2024 is for revenues of €175m at midpoint.
In July the company replaced long-standing CEO and co-founder Kristian Nylén with Werner Becher, ex of Sportradar.
Steal industry: A buyer at that price would be “getting a steal” based on a number of key assumptions around the value of the Kambi tech and its existing contracts and €52m of cash.
“The risk for Genius buying Kambi is very, very low while the revenue potential from re-signings or new contracts could be attractive, especially if Texas and California legalize,” one source added.
Notably, Kambi extended its supply deal just last week with Rush Street Interactive, which itself is the subject of recurring M&A chatter.
You’re not alone: Speculation has previously suggested MGM Resorts might be interested in buying Kambi given its LeoVegas operation currently runs on the Kambi backend. However, sources also pointed out such a deal “would be strange” given MGM’s recent acquisition of the Tipico US tech.
Ström warning: A possible stumbling block could be the position of major shareholder Anders Ström, who sources suggested might be holding out for a higher price and might not be attracted by any paper as part of any deal.
Notably, Kambi’s shares are down over 32% in the YTD, hurt in particular by a 20% drop caused by a disappointing Q4 earnings statement.
Current shareholders might not be enticed by a bid that ‘only’ got them back to the levels of late last year.
Even a 30% bid premium would be some way off the all-time high achieved in early 2021 of ~SEK525, when US market optimism – now long gone – was at its peak.
🫣 Snake and ladders: Kambi’s YTD
Open sesame
Cut and shut: Also currently the subject of much speculation is OpenBet, which was put up for sale by the soon-to-be-taken-private Endeavor last month with Oakvale subsequently confirming it has got the mandate to sell the business (again). Data supplier IMG Arena was also put on the block.
Endeavor bought OpenBet for $800m in 2022 but industry gossip suggested it will struggle to achieve anywhere near that price.
Sources have told E+M that the likeliest outcome for OpenBet is it will be broken up.
Assets such as the Don Best trading business and the SportCast bet builder operation are thought to be attracting the most attention.
A recent Sportico article suggested comments from Sportradar CEO Carsten Koerl on the company’s Q2 earnings call regarding potential M&A could be hinting at an interest in OpenBet.
Koerl told the analysts “there is a consolidation going on and some properties are coming to the market. We are looking into all opportunities here.”
Sources close to Sportradar have suggested the article was “purely speculative.”
Analyst take: Notably, the analysts at JMP today upgraded Sportradar to Outperform.
Micro processing: All this speculation follows on from the news that DraftKings has bought Simplebet, once more confirming the micro-betting and same game parlay area as one of intense interest to both B2C and B2B alike.
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+More
MGM Resorts has announced an upsized offering of $850m in new senior notes debt due in 2029. The proceeds will go toward returning debt due next year.
Star Entertainment has suspended its shares and is reported to be seeking debt relief and an injection of up to A$300m ($201m), after the Bell II report was issued late last week suggesting the company remained unfit to operate a casino in New South Wales. See yesterday’s Compliance+More.
Full House has sold the Stockman’s Casino, 60 miles outside Reno, Nevada for $9m to an entity called Clarity Gaming.
Betsson is to shutter its Betsafe operations in Colorado at the end of September, thus calling a halt to its B2C aspirations in the US. It announced the closure to customers via a notice on its website.
Gaming affiliate group Revpanda has bought up its long-term partner Leetz Media for an undisclosed sum.
What we’re reading
I will survive! ESPN prepares for life after cable with sports betting, streaming and social media. Via Axios.
Earnings in brief
Opap: H1 revenue rose 6% to €1.08bn while EBITDA was flat at €374m. Revenues were driven by a 24% increase in online GGR, while the company said it saw “resilience” in VLTs and retail. Q2 revenue was up 7% to €533m helped by the summer soccer tournaments and Euro ’24 in particular.
Intralot: H1 revenue fell 1% YoY to €174m while EBITDA was off by 5% to €59.5m. In Q2 GGR was up 4% to €80.2m. The company said that during the first half it had strengthened its financial position while also deploying the Lotus X system across its lottery infrastructure and extending deals in the Netherlands and Ireland.
By the numbers – Macau
Seasons change: August data showed GGR rose 15% YoY to $2.47bn, a 6% MoM improvement and up to nearly 82% of August 2019 levels. The team at Macquarie noted the GGR improvement could be in part attributed to the late start to the summer peak season.
The analysts noted Macau's government believes it is on track to reach its annual tourist arrival target.
Still, looking ahead to its leisure sector investor conference next week, the analysts at Bank of America repeated that valuations of stocks exposed to Macau were “at their cheapest in history.”
But to counter that, they noted the macro situation was at its weakest since the depths of the Covid era.
With concerns about money exchange and the upcoming local elections, the BoA team asked whether operators can “do anything to change the narrative” regarding China.
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Talking to the investors – Astralis
Evan Meyer is the managing partner at gaming, sports and media sector investor Astralis Capital, which most recently popped up as the lead investor in PlayAIO’s recent fundraise.
Alongside fellow partner LA-based Tisno Onggara, the São Paulo-based Meyer has many years of venture capital experience.
Astralis was previously noted as an investor in Strive Gaming alongside OpenBet.
Big ask: Meyer notes the “entwining” of the sector in which the fund invests, making for “actionable areas” in which to get involved.
“We look for companies that are seeking to solve a big problem or create a new use case with wildly innovative products and solid management teams,” he says.
Another sector-specific area is the process of online regulation. With Meyer based in Brazil it is obviously a country Astralis is “watching closely,” while the fund is also “keeping a keen eye out for the green shoots of legalization” in Asia, ex-China.
“Regulation is often the repressor of innovation – which can be both a good and bad thing – and is certainly the case in the gaming industry,” Mayer says.
He sees consumer interest in innovative business models that operate in gray areas (DFS and sweepstakes) and believes that once entrenched these products become legitimized. “It’s better to ask for forgiveness than permission,” he adds.
Startup focus – Omnigame
Who, what, where and when: Omnigame was founded in Copenhagen and is an independent Danish operator and game studio, operating the brand pip.dk since 2016 and has decades of experience across the team.
(Everything I do) I do it for you: Co-CEO Peter Weinreich, who runs the business alongside fellow CEO Mia Nyland-Evers, says Omnigame is “spearheading a revolution.”
“Everything we do, we do in-house,” he says. Innovation is the name of our game. We offer our own exclusive iGaming content through our proprietary platform.
What’s the big idea? As a game studio, platform provider and operator all in one, Weinreich says he wants to show that it’s “possible to own and control the full ecosystem.”
With just 30 proprietary games, he says Omnigame has managed to gain a “significant market share” and has global ambitions of taking its exclusive content to new markets.
Funding backgrounder: The last funding was a small strategic round with Oakvale Capital in H222, with previous investment coming from Dreamcraft, a fund created by the founders of Better Collective.
Growth company news
Defy the Odds, a new startup launchpad, has been set up by industry veterans Kelly Kehn, Paris Smith and Sue Schneider. The trio are now seeking founders ready to take their businesses “to the next level” and connecting them with mentors, investors and partners.
Every loser wins: A new fantasy game with a unique approach of allowing losers to win has launched its brand-new app. Loserball has begun life with a strategic partnership in place with production house Bettor Sports Network and its Fantasy Alarm brand.
A Portland, Oregon startup called Field Vision Sports offering bettors AI-based advice and tips has launched ahead of the new NFL season. The company was founded by former Nike executive Scott Bouska.
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.
Events calendar
Conference highlight: One of the starriest panels at the SBC Summit in Lisbon occurs on the Wednesday of the event, with a lineup of affiliate leaders that includes the respective CEOs from Better Collective, Gentoo Media and Catena Media – Jesper Søgaard, Jonas Warrer and Manuel Stan.
Sep 24-26: SBC Summit, Lisbon
Oct 7-10: G2E, Las Vegas
Oct 21-24: World Lottery Summit, Paris
Nov 5: Gaming in Germany, Berlin
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