The sides have been drawn, and the Battle for Eyeballs will now begin.
One of the most interesting developments in the proliferation of U.S. sports betting is the alliances formed between gaming and media companies.
These alliances involve a varied mix of gamers, from sports betting giants to daily fantasy operators to casino companies to companies barely known just months ago.
The latest announcement is that Caesars and DraftKings have signed comprehensive sports betting and promotion contracts with ESPN. That about wraps up the major media companies.
Other alliances are Caesars’ 20 percent owned William Hill and CBS, the MGM-GVC joint venture with Yahoo, Flutter’s FanDuel with Fox, little-known Australian PointsBet with NBC and, in perhaps the most ballyhooed deal, Penn National with website-blog Barstool Sports.
These alliances are about reaching tens of millions of prospective bettors.
The most comprehensive partnership belongs to Caesars-William Hill. Caesars has the world’s largest database of gamblers. CBS and ESPN may have the largest combined number of viewers. William Hill is the most experienced U.S. sports betting operator.
Penn National will try to exploit what might be the most engaged sports-minded audience, Barstool’s 66 million users.
DraftKings and FanDuel have the largest proven online sports betting audiences.
From an investor’s view, PointsBet might be the most interesting. As the smallest of the companies, it can be the biggest proportional winner, though its $395 million marketing commitment and small size also makes PBH the riskiest.
Other alliances may be announced, but the lines are drawn. Now the battles begin.
Don’t Forget These Two
There are other players in sports betting, such as Churchill Downs, which has its own platform, plus TwinSpires.com.
But two companies shouldn’t be forgotten: Rush Street Interactive and Golden Nugget Online. Both will be public soon through SPAC mergers. Rush Street will trade as RSI after merging with dMY Technology and Golden Nugget as GNOC after it merges with Lancadia.
Neither company is a sports betting name, but both have shown the ability to build their online gaming businesses. And, while sports betting makes the headlines, iGaming is proliferating as fast and has more potential—an estimated $22 billion in annual revenues in several years compared to $13 billion for sports betting by several forecasts.
As relatively small companies, Rush Street and Golden Nugget have PointsBet’s potential to translate modest market shares into big impact , and at less risk.
Investors also will get legendary leadership—Neil Bluhm at Rush Street and Tilman Fertitta at Golden Nugget.
The Boys from Up Over
The Australian takeover of Scientific Games is now complete, with former Aristocrat CEO Jamie Odell becoming chairman, Aussie investment firm Caledonia becoming a major shareholder, and the new ownership structure even being facilitated by an Australian bank, Macquarie.
Former Aristocrat executives fill top positions. Matt Wilson is CEO of gaming, Toni Korsanos is board vice chair, Siobhan Lane is chief commercial officer, Connie James is CFO of gaming. Products guru Rich Schneider will join them when his one-year non-compete expires.
That’s a lot of Aristocrat fire power joining CEO Barry Cottle, who, one must say, has a charming American accent.
Scientific Games has been a roller coaster stock for several years. Five years ago, the price fell to under $6. It then shot up to around $60. In March, it joined the COVID panic sinking to $3.76. In recent days, the announcement that Caledonia and other institutional investors are buying Ron Perleman’s 34.9 percent stake at $28 a share caused the stock to soar from under $19 to $31 and change as of this writing.
As a major slots and systems company with a large lottery business for ballast, Sci Games stock never should have seen single digits, despite worries about its heavy debt and its challenges integrating the acquisitions of several competitors.
Now, with strong gaming management and proven leadership from Down Under, this diversified gaming technology company will not see single digits again.
Talking About Aristocrat
Credit Suisse equity analyst Larry Gandler has an interesting idea: Aristocrat could buy an iGaming platform company, and GAN could be the target for $730 million. Such an acquisition would make sense, filling a niche in Aristocrat’s competition with IGT and Scientific Games.
Aristocrat has been assertive in moving online, and has done so through acquisitions—social casino operator Big Fish and non-gambling social gamer Plarium—so buying a platform company would fit the pattern.
A $730 million GAN purchase would be over $25 a share, a nice premium for a stock now selling under $18.
CEO and chief shareholder Dermot Smurfit did not relocate himself and his family to the United States and change GAN’s stock listing from London to Nasdaq for just a nice premium. He has bigger ambitions.
But as a small company, GAN could always be vulnerable to much bigger companies. Being part of Aristocrat could give Smurfit the financial and marketing platforms upon which to build his technology platform business.
And, as the old saying goes, where there’s a will, there’s a way.
