Risen from the dead
Dealmakers gain a new lease of life
M&A is back on the agenda but may feature surprising names.
In +More: Novig and ProphetX up the predictions vs. sportsbook rhetoric.
Scorecard: bet365 making moves in Michigan market share.
Venture playground: PrizeKings and EDGE Markets raise.
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Back, back, back
The morning light is turning blue, the feeling is bizarre: In the last month, Caesars has agreed an $18bn sale to Fertitta Entertainment, Barry Diller’s People Inc tabled an ~$18bn bid for MGM and, least surprising of all. evoke agreed a £2.3bn sale to Bally’s Intralot.
After a flat spell, deals are flowing once more and dealmakers are now looking at which companies may also be in play.
The night is almost over, I still don’t know where you are: But in a substack post, former evoke chief strategy officer Vaughan Lewis argued that a switch in who has access to capital means the usual consolidation suspects might be out of the picture.
In recent years, the largest listed operators have enjoyed premium valuations and inexpensive debt on the strength of being the sector’s growth stories.
The combination gave them the cheapest capital and, in the words of Lewis, “cheap capital wins M&A.”
As Lewis sets out the arithmetic, acquirers have been able to buy earnings at a low multiple, improve the performance and re-rate the acquired profits to the group’s higher multiple.
Now I’m Mr Charisma, fucking Pablo Escobar: Lewis noted this is not unique to the gambling sector and suggested what is new is that capital markets “appear increasingly willing to reward perceived future growth relative to proven cash generation.”
An obvious example of this comes from the IPO of SpaceX, trading post-float at a valuation of $2.1trn against actual annualized revenues of ~$19bn.
The view from space: Such is the froth attached to Big Tech valuations. But closer to the gambling sector, the prediction market leaders Kalshi and Polymarket have also recently achieved mammoth $20bn+ valuations.
Lewis pointed to these recent VC-backed valuations, saying that when investors decide that future growth “belongs to a category the incumbents do not own, the valuation premium migrates with it.”
Taken down a notch: This migration has seen both Flutter and DraftKings suffer significant falls in their share price within the last year, with the first down 60% in the last 12 months and the latter off by 25%.
Back when Flutter was worth more than $50bn, the company was able to complete the acquisition of Snaitech for €2.3bn and buy a majority stake in Brazilian operator NSX for $350m.
Now, sources suggested, the company couldn’t do anything with regard to M&A even if it wanted to.
Currency exchange: Lewis isn’t the only market watcher to question whether the prediction market operators now enjoy the valuation premium that used to belong to their OSB competitors, and using the currency of their valuations to be the next big buyers in the OSB space.
It is a train of thought that was recently pursued by the analysts at EKG, who said in a post at the start of May that the potential for a prediction market operator to acquire an OSB operator was “one idea floating around industry circles.”
EKG suggested the execution of such a deal would be “littered with obstacles,” including a state-by-state regulatory process that could prove tortuous.
Moreover, as EKG asked, which OSBs would be selling at these levels and “who exactly is selling Kalshi or Polymarket paper right now?”
Stake in the heart: A second potential acquirer name put forward by Lewis would be (perhaps more) controversial: Stake. Its revenues may, as Lewis said, be “earned differently” but the figures are “real and on a scale that would place it in the top 5.”
As he noted, it is already buying its way into regulated markets in Colombia via the acquisition of Betfair Colombia, Italy with Idealbet and Denmark with VinderCasino.
But even more so than a prediction markets’ buyer, Stake’s route to larger regulated markets via M&A might be somewhat tortuous.
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+More
Perpetuals: Kraken and Coinbase have both officially launched perpetual futures products. Kraken activated CFTC-regulated crypto perps via its Bitnomial acquisition, covering nine tokens; Coinbase listed four thematic equity-index perpetuals. Both followed the CFTC’s May 29 approval of Kalshi’s bitcoin perpetual contract, pulling offshore-built products onshore.
Novig is the latest operator to be granted CFTC DCM approval. Founder Jacob Fortinsky told CNBC that the company would be sports-first, adding “we’re really rendering sportsbooks obsolete.” Novig raised a $75m Series B funding round in February led by Pantera Capital, which valued the business at $500m.
What we’re reading.
It’s a view: “Sportsbooks are criminals hiding in plain sight. Prediction markets are the antidote. And ProphetX will be leading the charge.” Dean Sisun, co-founder and CEO of ProphetX, makes a quiet entry into the substack fold.
Earnings in brief
AGTech‘s FY26 revenue rose 24% to HK$761m ($97m), though the gain leans heavily on a full year of Ant Bank (Macao) consolidation. The gambling-relevant lottery arm fell 12% to HK$211.2m on weaker hardware tenders. Operating loss widened to HK$84m; the headline narrower net loss reflects an absent prior-year India write-down rather than operational improvement.
Scorecard
Now we’re motoring: The latest data from Michigan covering May shows bet365 enjoying the fruits of its launch in April, with the company grabbing $22.3m of GGR for a 29% share on $66.8m of handle, representing a hold percentage of over 33%. A promo spend of $38.3m, however, pushed the NGR into negative territory.
Notably giving up ground was FanDuel, down to just under 30% from over 45% this time last year,
Meanwhile DraftKings was down to 19% from 25% and BetMGM fell to 8% from 15%.
In iCasino, bet365 grabbed a 3.6% share vs. 25% for FanDuel, 21% for BetMGM and 15% for DraftKings. Notably, Hard Rock continued to grab market share, up to 7%.
Shore thing: In New Jersey, meanwhile, bet365 is also gaining ground in OSB with GGR of $7m, up 16% YoY and placing it in fourth place just behind Fanatics on $7.6m and ahead of BetMGM on $6.8m.
FanDuel continues to lead New Jersey with 41% share while DraftKings held second spot with 26%.
Puts+Takes
The only game in town: Looking into the situations involving Caesars and MGM Resorts, the team at Stifel has taken on the role of interested observers, downgrading both stocks from Buy to Hold but believing both bids undervalue the targets.
In the case of Caesars, Stifel said the Fertitta Entertainment takeout offer of $31-a-share was conservative, but the team noted they are struggling to identify a “materially higher competing offer.”
“Once the go-shop period expires, we wouldn’t be surprised if Caesars’ board unanimously recommends shareholders approve the transaction,” they added.
Risk appetite: Still, the reason for the move to Hold is that the team believes there is a “meaningful risk” the deal doesn’t complete due to heightened regulatory scrutiny and the complexity of Caesars operations.
The fact the board would likely recommend the offer is because of the “depressed appetite for regional gaming and value-oriented Strip assets in the current market,” they said.
Meanwhile, in the case of Barry Diller’s People Inc’s offer for MGM, while investors “clearly believe the initial bid undervalues the company as the shares now trade above the offer price,” it is similarly hard to see from where a competing bid might emerge.
Questioning how far Diller might be prepared to go to acquire MGM, the Stifel team admitted they “have no idea how to handicap Diller’s appetite.”
“He clearly believes in the business,” they added, pointing to his six-year involvement, which has seen his interest in the company rise to 25%.
But the team believes any increased offer would only likely be ~10% above the one already tabled.
And should MGM reject the offer, and Diller doesn’t increase the bid, then the shares would likely re-rate back to the levels they were before a bid emerged.
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Venture playground
Funding rounds
PrizeKings, a South African digital prize draw platform, has secured seed funding from specialist online gaming investors Vyking Ventures and Betplay Capital, as it looks to replicate the success of the UK’s £1.6bn prize draw market across Africa.
Co-founder Nick Batram, a former Entain exec, said the funding would be used to expand its platform infrastructure and accelerate growth, with South Africa serving as the launchpad for broader continental expansion.
Batram founded the business alongside fellow ex-Entain veterans Will Longton and Gary Nall.
Trust fund: Operating through prizekings.co.za, the offering is based on a model that has gained significant traction in the UK in recent years. Batram said the focus on transparent, auditable draws and affordable ticket prices is helping build trust in a market where consumer confidence has historically been limited.
Klaus Walsberger, founder of Vyking, said PrizeKings was “exactly the kind of business Vyking Ventures was created to support.”
“Prize draws are becoming a more professional, scalable and locally relevant category, and PrizeKings has the leadership, platform and operational mindset to help lead that next phase of growth,” he added.
EDGE Markets has raised $29.2m in a Series A funding round led by CoinFund, as the company looks to position itself as a critical financial infrastructure for the prediction markets ecosystem.
Existing and new investors, including Indicator Ventures, Mantis VC, StepStone Group and Bullpen Capital, also participated in the financing.
Go Pro: The company said proceeds would be used to launch two new products: EDGE Pro, a banking platform designed for market makers and institutional traders operating across prediction markets.
Then EDGE Connect, a payments network built specifically for gaming and prediction market transactions.
According to the company, the products are intended to address operational bottlenecks that have emerged as prediction market activity accelerates.
EDGE Pro is aimed at solving capital efficiency challenges faced by institutional participants. The platform will provide high-throughput deposit accounts capable of supporting real-time transfers into CFTC-regulated exchanges while facilitating post-trade settlement across multiple liquidity pools.
To support the offering, EDGE Markets is pursuing introducing broker and futures commission merchant registrations with the National Futures Association.
The company believes these capabilities will reduce the need for fully prefunded trading accounts and allow market makers to deploy capital more efficiently across venues.
Meanwhile, EDGE Connect is designed as a dedicated payment rail for gaming and prediction markets, enabling faster and lower-cost movement of funds between users, operators and exchanges.
The company argues that traditional banking infrastructure was not built for always-on markets and that a purpose-built settlement layer is required as prediction markets become a larger segment of financial trading activity.
PlayAIO: Back with Vyking Ventures, the company has also announced an investment in data and artificial intelligence firm PlayAIO, which will go towards product development and enhancing its platform’s data, reporting and automation capabilities. PlayAIO CEO and founder Joshua Gibbs said Vyking was a “strong strategic partner for the next stage of our growth.”
Growth company news
A new iCasino and sportsbook operator 21.com has launched with ambitions to become a major global gaming brand under founder and CEO Michael Carlton (ex-BetVictor CEO). The company plans to target multiple regulated markets using an AI-driven operating model and modern technology stack.
WagerWire has received approval in principle from Gibraltar regulators for its planned prediction market initiative, marking a significant step in the company’s international expansion strategy. The move follows Gibraltar’s recent efforts to attract prediction market operators as it seeks to diversify its gaming industry and capitalize on growth in event-based trading products.
Upcoming earnings
Jul 17: Evolution, Betsson
Jul 21: Hacksaw Gaming
Jul 22: Kambi
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