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DraftKings’ rumored sale of VSiN highlights another convergence failure
Will US OSB and sports media ever add up to more than the sum of its parts?
In +More: the big deals from the last few weeks.
The quarterly M&A table is dominated by Brightstar’s AGS bid.
GiG major shareholder sees a bright future for affiliate biz.
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About that convergence thing
Dollar general: The rumor that DraftKings is set to sell Vegas Sports Information Network (VSiN) back to its founder Brent Musburger for a nominal sum – think Dave Portnoy’s deal to take back control of Barstool Sports for a dollar – once again casts a shadow over hopes of a greatest convergence between sports betting and sports media.
We are such stuff as dreams are made on: The $70m March 2021 deal was originally announced with a degree of fanfare, and during DraftKings Q121 earnings call CEO Jason Robins said VSiN had “synergistic qualities to acquire and retain users.”
He also suggested at the time that DraftKings might consider the possibility of streaming live pay-per-view events on the channel.
Our little life is rounded with a sleep: However, with annual losses reportedly hitting $10m a year and a sale on the horizon, it seems clear such scenarios were wildly optimistic.
Beating the book: While not as ambitious as the idea of taking the Barstool brand and translating it into a betting proposition, the VSiN deal still envisaged a greater degree of crossover between media and sports than appears to have been the case.
Crucially, in both instances, it appears the consumer wasn’t following the script.
Barstool may have had 200m loyal followers, as Penn boasted when it completed the acquisition of the company in early 2023, but that clearly didn't translate to sportsbook consumers.
Similarly, while Musbugrer said in the press release announcing the acquisition that “harnessing the power and network” of DraftKings would allow VSiN to “reach an even wider audience,” that hasn’t translated to profits.
Other sports-betting and media plays have similarly fallen by the wayside, including Fubo TV’s short-lived attempt at running a sportsbook and Carousel’s ill-fated MaximBet.
There but for the grace of God: It could have been worse. In November 2021 it was reported that both DraftKings and FanDuel were in the race to buy The Athletic when the then VC owners were reportedly seeking a price of up to $750m.
That race was eventually won by The New York Times, which bought the sports website for $550m in 2022.
Stay tuned
Life in the old dog yet: Of course, the convergence ideal does live on and, as per the report late last week that Flutter Entertainment was considering partnering with Boyd Gaming on a bid for Penn Entertainment, FanDuel is central to the argument.
News just in: According to The Deal, as part of a joint bid with Boyd, Flutter is interested in buying Penn’s interactive business. This would see it take over control of the ESPN Bet joint venture, which is now perhaps the biggest betting and media convergence play in the US.
Penn CEO Jay Snowden admitted there would be “bumps in the road” at the time of the Q1 earnings.
But analysts and activist investors remain skeptical of the prospects of success with Penn’s current management at the helm.
Time is of the essence: Penn insists the true test for the product and its integration with ESPN comes with the new football season in September. But a developing M&A picture might see the entire experiment handed over to Flutter. Recall, FanDuel has also dipped its toe in the sports-betting broadcasting waters with its own direct TV product.
In its favor, Flutter is the home of the one truly successful sports-betting/sports media convergence play with Sky Bet.
But the specificities of that success in the UK vs. what would be needed for ESPN Bet to emulate it mean a similar outcome is by no means a given.
Key dates
Jul 25: Boyd Gaming reports Q2 earnings
Aug 8: Penn Entertainment reports Q2 earnings
Aug 13: Flutter Entertainment reports Q2/H1 earnings
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+More deals
MGM buys Tipico US
New train set: MGM Resorts confirmed in late June that its subsidiary LeoVegas has bought the product and platform of Tipico US for an undisclosed sum, as had been predicted by E+M. Tipico is now set to wind down its US operations ahead of the deal closing in the third quarter.
MGM Resorts said the acquisition of the Tipico US platform would allow LeoVegas to operate a “purpose-built proprietary sportsbook across all international markets and brands” excluding those exclusive to the BetMGM JV.
Gary Fritz, president of interactive at MGM Resorts, said the deal was a “significant milestone in the strategic development of MGM Resorts’ global digital gaming business.”
“This acquisition gives us control of our entire technology ecosystem,” he added.
Entain strategic review
Dampening effect: The strategic review undertaken by Entain’s capital allocation committee concluded in late May the only part of what can now be classed as a sprawling empire that should be disposed of is the non-core Georgia-based Crystalbet.
The team at Peel Hunt were disappointed with the limited nature of the committee’s conclusions, saying: “We interpreted the creation of the committee as a precursor to material and value-creating disposals by Entain.”
“It appeared to be one step short of the announcement of a ‘strategic review’. We were wrong. The end of the process was the dampest of squibs.”
EveryMatrix buys FSB
Every picture tells a story: As revealed on Friday, EveryMatrix has snapped up rival sportsbook and PAM provider FSB Technology for a sum sources suggested is some way short of the rumored £20m price tag that had been put on the business by private equity owner Clairvest.
The sale of FSB Technology was predicted by Earnings+More back in May when it was noted that Clairvest had hired Oakvale Capital to explore the appetite for a deal.
Caesars buys ZeroFlucs
Give a flucs: Caesars Entertainment has moved to strengthen its OSB proposition by acquiring Australian-based sports-pricing provider ZeroFlucs for an undisclosed fee, in the latest stage of the trading capability arms race.
The acquisition follows on from DraftKings’ purchase of Sports IQ in May, Entain’s Angstrom buyout and PointsBet’s deal to buy Banach Technologies before it was sold to Fanatics.
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Quarterly M&A
Bright spark: A total of ~$1.3bn in M&A was completed in Q2 but the vast majority of that came through Brightstar’s $1.1bn offer for bricks & mortar and iCasino gaming provider AGS. See Earnings+More’s coverage of the news here.
The $12.50-a-share all-cash offer represented a 40% premium on the share price the day before the deal and the share price action since would suggest the offer passes muster with shareholders.
Trading places: Among the other notable deals is DraftKings’ buyout of player prop oddsmaker Sports IQ, which sources suggested fetched up to $50m. As E+M reported, it is also thought DraftKings could further augment its trading operation by buying micro-betting specialist supplier Simplebet.
In related news, as per above, last week Caesars Entertainment made its own move when it announced the acquisition of Australian-based sports-pricing provider ZeroFlucs.
Juroszek thinks big
This thing could be huge: Mateusz Juroszek, the ex-founder of Polish bookmakers STS and alongside his brother a 25% shareholder in GiG, said the soon-to-split-away gaming affiliate business could “very soon” become one of the largest providers in the space.
Speaking to Earnings+More, Juroszek said the unit, which will be renamed Gentoo Media when it officially splits from the sportsbook and iCasino provision business later in the year, said the company would be “well-positioned to become one of the biggest affiliates in the world.”
“It has everything,” he said. “We have the strategy, the experienced team and good examples of M&A.”
“I have been running the largest bookmaker in Poland for years. I know how to create a big entity in a few years. STS from Poland is a very good example.”
Buy and build: Recall, Juroszek’s family have been building their stake in GiG for the past year or more, and recently became the largest shareholder after snapping up New Zealand casino operator Sky City’s 10.5% holding.
The shareholding is split between various entities and trusts controlled by both Mateusz and Tomasz Juroszek.
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Calendar
Jul 19: Evolution, Betsson
Jui 24: Kambi, Churchill Downs (e)
Jul 25: Churchill Downs (call), GLP (e), Boyd Gaming
Jul 26: GLP (call)
Jul 30: IGT, Red Rock, Caesars Entertainment
Jul 31: MGM Resorts
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For sponsorship inquiries email scott@andmore.media.
