- Mergers and acquisitions will shape the legal sports-betting industry in the US in 2021.
- Insider asked sports and gaming-industry bankers, and other experts, how deals could play out.
- A US firm could buy European provider 888 Holdings, digital brands like The Action Network could get acquired, and casino companies could make big moves.
- Visit Business Insider’s homepage for more stories.
The burgeoning US sports-betting industry has created a windfall of deal activity over the past two years, as casino companies rush to shore up their positions, daily-fantasy-sports sites dominate, and other sports-betting operators seek splashy media tie-ups to growth their audiences.
Ciesco, a global M&A advisory firm focused on tech and media, tracked a number of high-profile deals in sports betting over the last year, including William Hill’s takeover by Caesars Entertainment, Flutter Entertainment taking full control of the Stars Group, and affiliate-marketing giant Better Collective acquiring online-gaming lead generation firm Atemi Group.
While Ciesco said the overall number deals across global tech and media fell year over year in 2020 because of the pandemic, the firm forecasted a rebound in 2021 that will include sports betting.
“What we predict is that due to the growth of digital platforms, the rise in remote working, and COVID restrictions, as well as the easing of restrictions around online beating easing globally, there will be a surge in sports betting mergers and acquisitions this year,” Ciesco CEO Chris Sahota told Insider.
Insider spoke with six sports-betting bankers, advisors, and analysts about how the talks in the US sports-gambling industry could play out.
The people said talks would be driven by the same three business goals:
- Growing audience — the common thread behind most of the media tie-ups so far, like Penn National Gaming’s stake in Barstool Sports
- Market access, namely licenses to operate sportsbooks in states where gambling is legal — this was part of the reason streaming-TV company FuboTV bought startup Vigtory
- Access to tech — a factor in DraftKings’ triple merger with the blank-check company Diamond Eagle Acquisition Corp and tech supplier SBTech
But, new themes are emerging, too.
US casino operators Bally’s Corporation and Caesars Entertainment began the new year by buying stakes in daily-fantasy-sports startups, Monkey Knife Fight and SuperDraft respectively. They hope the startups will help them build followings in markets where sports betting is not yet legal, like California, Florida, and Texas. Other names among that breed of startups could be snapped up this year, too.
Any media company that overlaps with the sports world could be considered a takeover target. Radio broadcaster Entercom’s stock popped after it acquired direct-to-consumer sports-betting data company BetQL and said it planned it launch a sports podcast network, which illustrates how media companies can get in on this trend.
And with concerts, conferences, and foot traffic stalled for casino companies used to making money on in-person events and activities, any US operator that hasn’t planted its flag in online sports betting is expected to do so this year.
Industry watchers expect a range of deals, big and small, across the sector, but these are the ones most likely to make waves in 2021:
Digital-native sports brands: The Action Network and others get bought or rolled up
Nearly every media company that covers sports is fielding talks these days from gambling companies that want to monetize their audiences.
Casino companies are said to be eyeing deals with a flurry of digital natives, including the sports-media startup The Action Network. The Action Network, launched by The Chernin Group in 2018, is known by sports gamblers for the data and research its publishes, like bet tracking and live odds.
Regional casino operator Penn National Gaming bought a stake in Barstool Sports last year that valued the digital-media brand at a staggering $450 million and created a blueprint for how these deals could be structured. Penn took a large minority position in Barstool with the option to take a controlling stake, and then built its sportsbook around the Barstool brand.
Another casino company like Bally’s Corporation or one of the many special-purpose acquisition companies circling the sector could make a similar play for The Action Network. Two sources said the talks could value The Action Network in the $200 million range, a potential valuation one of the people said had risen in the last year.
The Action Network isn’t the only digital-media brand in play. Publishers with sports content, including SB Nation, The Ringer, and The Athletic (which announced a new exclusive marketing partnership with BetMGM this week), are all being named as potential takeover targets in 2021, as are and smaller sites that are popular among bettors like NFLTradeRumors.co and Sports Betting Dime.
Minute Media, a startup that has snapped up a number of sports-media brands like The Big Lead and Fansided, could be in the market as both a buyer and a seller. It could pick up a few of the smaller aforementioned media brands, or get bought itself.
888 Holdings: the next big European target
US casino operators are eyeing international online-gaming competitors after Caesars Entertainment paved the way for such deals with its bid to take over UK-based operator William Hill late last year. MGM Resorts International also recently attempted to buy the British gambling group Entain.
888 Holdings, a well-known online gambling company listed on the London Stock Exchange, is the next likely target, three sources said.
Two of the people said casino company Las Vegas Sands Corporation, whose new CEO Robert Goldstein has expressed his interest in pursuing the online-gambling business, could make a play for the Gibraltar-based company.
Another traditional casino company that’s pushing into online betting might also enter the running, such as Wynn Resorts, which is known for its relatively lean management structure and one source said is most likely to pursue a large, transformative merger, if at all.
Bally's Corporation: on the hunt for deals to help it take on DraftKings
Bally’s Corporation is expected to make a steady stream of acquisitions through 2021 that aim to elevate its legacy casino brand among US sports bettors.
Regional casino owner Twin Rivers Worldwide Holdings bought the Bally’s hotel and casino brand from Caesars Entertainment last fall, and took the name for the combined company.
Since then, Bally’s has bought sports-betting platform Bet.Works for $125 million. It inked a 10-year deal with Sinclair Broadcasting Group that includes rebranding 21 of its regional sports-networks to bear the Bally’s name. And it acquired this week daily-fantasy-sports startup Monkey Knife Fight. The startup, though significantly smaller than rivals DraftKings and FanDuel, could play a similar role in helping Bally’s building a database of potential sports bettors in key areas where gambling on sports is not yet legal, like California, Florida, and Texas.
Bet365: could expand its position in the US
Bet365 is the largest online-gambling company that hasn’t yet made a splashy entry in the US.
The 20-year-old British betting giant, cofounded and run by Denise Coates and her brother John, operates sportsbooks in three US states. But it has not expanded as aggressively in the market as international rivals like William Hill or PointsBet that have inked big tie ups with US media and casino companies.
Bet365 is a staunchly British business. The private company is headquartered in the Coates family’s hometown of Stoke-on-Tent where director Peter Coates, Denise and John’s father, is also chairman of the local football club, Stoke City FC.
The company could take a harder look at the US market this year.
Bet365 has a foothold in New York, a key state that could spur mainstream adoption and acceptance of sports betting, which US states only began legalizing after a federal ban was lifted in 2018. In January, NY regulators introduced legislation that would expand sports betting from casinos to mobile phones. The timing and details on the rollout are still being decided. But industry dealmakers are watching whether New York and the momentum around US sports betting will encourage Bet365 to broaden its position across the pond.
Bleacher Report: the hottest sports-media asset that may or may not be on the market
Bleacher Report has arguably been the hottest sports-media asset on the market since Barstool Sports inked its $163 million deal with Penn National Gaming last year.
The main issue is that Bleacher Report isn’t exactly “on the market.” Turner Broadcasting bought Bleacher Report in 2012, and was later bought itself by AT&T.
Bleacher Report has since been caught up in corporate restructurings and cultural issues that caused some senior staff to exit last year, including CEO Howard Mittman, content chief Sam Toles, and operating chief Alex Vargas.
AT&T hasn’t publicly expressed interest in selling Bleacher Report to a casino or other sports-betting firm.
Front Office Sports reported in May that DraftKings was exploring an acquisition of Bleacher Report, and a Turner Sports spokesperson told the publication that Bleacher Report “is not for sale and there is no truth to this misguided speculation.”
Still, Bleacher Report has expanded its content for gamblers in recent years, and gaming companies are still sizing up opportunities with the sports-media brand.
A source close to AT&T told Insider early this year that the telecom has been more friendly to bankers who are presenting ideas to spin out Turner, which is tightly integrated with the rest of the company and would be tricky to separate.
A spin-out of Turner could create an opening for a gaming group to get in on Bleacher Report.
“It’s such an attractive asset that people will come with generous and creative offers,” one sports-betting analyst and investor said.
Turner Sports does have existing partnerships both DraftKings and FanDuel that include some brand integrations and sharing betting and daily-fantasy-sports information with Bleacher Report.
Caesars Entertainment: more to come after William Hill merger
Casino operator Caesars Entertainment, a staple on the Las Vegas strip, is one buyer to watch after its 2020 merger with Eldorado Resorts closed in July.
Management, including new CEO Tom Reeg who came from Eldorado, has signaled it will move more aggressively to take on DraftKings and FanDuel and cement the company’s standing as a US leader in gaming.
Two months after Caesars completed its merger with Eldorado, it announced a £2.9 billion ($3.96 billion) takeover of UK operator William Hill. The deal still faces regulatory hurdles but could create a US sports-betting behemoth. William Hill already has sportsbooks in most of the US states where sports betting is legal and Caesars’ footprint could help it expand more swiftly as more states come online.
If the deal goes through, Caesars plans to divest William Hill’s non-US operations, which Reuters reported could sell to a private-equity firm like Apollo Global Management.
Caesars may also look to acquire smaller companies that can help it build audiences in major markets where sports betting isn’t yet legal, or shore up other aspects of its position like its tech. Just this week, Caesars said it bought a minority stake with the option to take a controlling position in a a daily-fantasy-sports startup called SuperDraft. It offers Caesars access to a database of sports fans it could eventually try to monetize through betting.
DraftKings: actively exploring M&A opportunities
DraftKings is gearing up for a major deal, or series of deals, in 2021.
After a strong third quarter, management said on the company’s earnings call that the company would be exploring M&A opportunities.
“While we have no specific M&A targets at this time, we are always considering companies that may help us fuel our growth and bring more excitement to the skin-in-the-game fans,” CEO Jason Robins said in his opening remarks, which he reiterated at the end of the call.
CFO Jason Park also said the company had no debt and $1.1 billion of cash on its balance sheet that it could potentially put toward M&A.
Bankers are floating lots of targets by DraftKings, from a European operator, to a tech supplier, to an online-gambling company that could expand DraftKing’s gaming purview, to a media company. Front Office Sports reported last year that DraftKings was eyeing Bleacher Report, though companies denied a deal was in the works.
DraftKings, which went public last year through a merger with a special-purpose acquisition company and tech supplier SBTech, has positioned itself as the only integrated sports-betting stock on the market and Wall Street has rewarded its pure play.
Shares are up 51% since its 2020 trading debut while the S&P 500 is up 9%. And the company is now worth $21 billion.
Whatever deal DraftKings makes, two sources familiar with the company’s thinking said not to expect it to deviate from its market position.
PointsBet: a buyer to watch after its big NBCUniversal deal
PointsBet is another buyer to watch in 2021. The Australia-based gambling operator set up shop in the US two years ago and has made some big strategic moves since.
Most recently, it signed a $500 million deal with NBCUniversal. PointsBet isn’t as well known in the US as it is internationally, but it hopes the deal can help change that by giving it a presence on the US media giant’s sports networks, streaming service Peacock, and free-to-play app NBC Sports Predictor.
NBCU, meanwhile, is getting marketing payments, fees in exchange for customers referred to PointsBet, and a small stake in the company.
Several sources Insider spoke with said that PointsBet hasn’t been as aggressive in pursuing acquisitions in the last year as the US casino companies. It’s prioritized marketing and other partnerships with teams and leagues.
But the NBCU deal shows it has an appetite.
“PointsBet has shown a willingness and capacity to make big moves and NBC deal is a good example of that,” one analyst said.
Hard Rock Digital: casino companies could spin off their digital arms
Wall Street has been rewarding sports-betting stocks and US casino companies may be looking for more ways to cash in.
Operators like Penn National Gaming, the Hard Rock International, and Wynn Resorts could spin out their digital arms this year through a special-purpose acquisition vehicle (SPAC) or other means.
Penn’s sportsbook sits within its digital division, Penn Interactive Gaming. Hard Rock also launched a digital arm in December that’s focused on its sportsbook and online gaming. And Wynn Resorts reorganized its sports-betting joint venture last year under a new unit, called Wynn Interactive. Spinning those businesses out wouldn’t change much from an operational standpoint but would allow those companies to access more equity on the public markets.
Chicago-based Rush Street Interactive went public in January through a merger with the SPAC dMY Technology Group, setting the stage for these kinds of deals. The stock started trading on January 5, and is up about 15% since.
PrizePicks: DFS startups could be snapped up
Daily-fantasy-sports (DFS) startups are emerging as an early trend among takeover targets in 2021.
In the first few weeks of the year, Bally’s Corporation bought Monkey Knife Fight and Caesars Entertainment picked up shares of SuperDraft.
After DraftKings and FanDuel established and legitimized the category — which was not an easy thing to do — entrepreneurs launched rivals with unique styles or niches such as fantasy esports.
Now, casino companies that already have ins with gamblers are turning to these DFS sites to help them build databases of potential sports bettors in parts of the US where sports gambling is not yet legal, including major markets California, Florida, and Texas.
Some professional teams are also working with DFS sites to boost fan engagement, since people still for the most part cannot attend sporting events due to the pandemic. PrizePicks, a DFS startup that describes itself as “the closest legal alternative to legal mobile sports betting” in most of the US, struck a partnership in September with the Atlanta Braves. (PrizePicks is also based in Atlanta.)
PrizePicks is one to watch as a potential takeover target, one sports-betting industry advisor said, as are Thrive Fantasy, Betcha, and Underdog Fantasy.
Sports Illustrated: reportedly shopping for a betting partners
Will 2021 be the year that Sports Illustrated lands a big sports-betting deal?
Brand-management firm Authentic Brands Group, which bought the sports-magazine brand for $110 million in 2019, had been shopping the license to the company’s sports-gambling arm SI Bets to several companies as of last August, the NY Post reported.
SI Bets might not be as attractive a deal to some partners as a sports media company like Bleacher Report because any deal would be for the brand only, and wouldn’t allow the buyer to leverage content to attract audiences the Penn National Gaming has with Barstool Sports, let’s say. Digital publisher Maven currently licenses SI’s media operations.
But SI Bets could appeal to a regional or international operator that wants a recognizable brand to bring its sportsbook to a larger stage, one sports-betting analyst said.
SPACs: eyeing sports-betting companies
Special-purpose acquisition companies (SPACs) are dominating dealmaking in nearly every industry, so it’s no surprise that a string of blank-check companies have arisen that are circling the sports-betting sector.
The industry completed one of the most successful SPACs to date when DraftKings went public last year through a merger with the blank-check company Diamond Eagle Acquisition Corporation and tech supplier SBTech. DraftKings stock is up 51% since that April trading debut.
Tekkorp Digital Acquisition Corporation, founded by gaming-industry veterans Matt Davey, Eric Matejevich, and Robin Chhabra, raised $300 million to pursue companies around the digital media, sports, entertainment, leisure, and gaming sectors.
Banker Ken Moelis, who runs Moelis & Co, also has a blank-check company called Atlas Crest Investment Corp. II that aims to raise up to $250 million and said it may target the sports-betting field, among others.
Former WWE copresident Michelle Wilson and George Barrios are also launching a SPAC called Isos Acquisition that highlights growth projections for sports betting, among other industries, in its filings, which signals it could snap up a venture in the sector.
And dMY Technology II, run by the same folks who took Rush Street Interactive public, is buying UK-based Genius Sports in a $1.5 billion deal. Genius Sports is a competitor to Sportradar that gathers data from sporting events and supplies it to betting platforms and other companies.
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