Gambling M&A market in the spotlight: Top 10 deals of 2022

Andrew Rhodes, head of the U.K. Gambling Commission, has added his voice to those predicting more mergers & acquisitions in the industry, as economic headwinds and increasing regulation drive the search for economies of scale.?

At a conference in Melbourne earlier this week, he outlined how M&A is changing the face of the market. The top ten U.K. operators now represent 77 percent of total B2C gross gambling yield in the country and once recent mergers are taken into account, the top three will make up 50 percent.

The most fertile ground for M&A going forward is likely to be the B2B market, especially in the U.S., which has less exposure to regulatory and responsible gambling risk and greater revenue stability.?

Either way, the pace in recent years has been fast and furious. So far this year, there have already been several multi-billion dollar acquisitions completed.?

2022 sees completion of multi-billion acquisitions despite economic headwinds

The following are some of the top ten completed, or announced deals, so far this year. (Not including real-estate-related transactions)

Blackstone Group finally completed its $6.4 billion acquisition of Australia’s Crown Resorts in June, its largest acquisition to date in the Asia Pacific region. Alan Miyasaki, Head of Real Estate Acquisitions Asia, Blackstone, said: “We are thrilled to become the new owner of Crown, bringing our expertise in hospitality to help the company achieve its full potential as a leading travel and leisure company. We first invested in Crown two years ago, seeing the tremendous underlying potential of the company and its people.” Crown agreed to a third sweetened offer from Blackstone in February.

Light & Wonder, formerly known as Scientific Games, sold its lottery business to Brookfield Business partners for $6.05 billion. The deal consisted of $5.825 billion in cash and an earn-out of up to $225 million. “This transaction is transformative in accelerating the delivery of our stated strategy to optimize our portfolio, aggressively de-lever our balance sheet and position us to invest in future growth,” said Barry Cottle, CEO at the time the deal was announced. The sale was completed in April this year.??

Churchill Downs agreed to buy the assets of Peninsula Pacific Entertainment for $2.48 billion in February. This includes assets in Virginia and New York as well as the operations of its Sioux City casino property. The transaction is expected to close by the end of 2022. “This unique set of assets expands our geographic footprint and provides additional scale,” said Churchill CEO Bill Carstanjen. “P2E has done an exceptional job developing and managing this collection of assets, which we are very excited to acquire and plan to strategically grow in the years ahead.”

Acquisitions in online space

888 Holdings bought William Hill’s non-U.S. assets from Caesars Entertainment for GBP1.95 billion ($2.2 billion) after the sale price was revised down by GBP250 million. Caesars will be eligible to receive a further GBP100 million should William Hill meet its 2023 financial targets. Lord Mendelsohn, Chair of 888, also commented on the completion of the Acquisition: “This combination brings together two high quality businesses to create a powerful, global betting and gaming business. We believe the acquisition will create significant value for shareholders, creating a combined business with leading technology, products and brands across sports betting and gaming. The deal was completed in July.

Flutter Entertainment bought Italy’s leading online gaming operator, Sisal, from CVC Capital Partners Fund VI for a consideration of €1.913 billion ($1.88 billion). It said the acquisition fully aligns with the group’s strategy of investing to build leadership positions in regulated markets globally. “For some time we have wanted to pursue this market opportunity via an omni-channel strategy and this acquisition will ideally position us to do so,” Flutter CEO Peter Jackson said. The deal was completed in August.

Equity slide shrinks valuations

DraftKings completed its acquisition of Golden Nugget Online Gaming in May. The company said the purchase will allow it to leverage Golden Nugget’s established brand to broaden its reach into new customer segments and enhance the combined company’s iGaming product offerings through DraftKings’ vertically-integrated tech stack and Golden Nugget Online Gaming’s unique capabilities – including Live Dealer. The all-stock acquisition was worth $1.56 billion when it was announced in August last year, at 0.365 DraftKings share per one Golden Nugget share. It was worth considerably less at closing following a slide in equity prices. Golden Nugget was originally trading at about $12, but was down to just under $6 on its final trading day.

Entain agreed to buy the Netherlands’ BetEnt in June for a consideration of EUR850 million ($836 million). The purchase price is made up of an initial consideration of EUR300 million and a deferred portion of EUR550 million. BetEnt trades under the name of BetCity. “We are delighted that BetCity is joining Entain and are excited by the significant opportunities in the newly regulated Dutch market,” CEO Jette Nygaard-Andersen said. The deal is expected to close in the second half of this year.?

Endeavor Group completed the acquisition of Light & Wonder’s OpenBet sportsbetting unit in September. L&W, formerly known as Scientific Games, said it received gross proceeds of $800 million from the sale to Endeavor Group Holdings. A total of $750 million of that was in cash. L&W said completion of the sale is the final step in a strategic plan that it announced in June last year. “With the completion of the OpenBet divestiture and our now streamlined organization, Light & Wonder is well positioned to execute on our growth strategy with a singular focus on building great games fully cross-platform,” said Matt Wilson L&W CEO.?

Focus on core assets

International Game Technology? sold its Italian proximity payment business to PostePay S.p.A. for EUR700 million ($689 million) . “This transaction provides us with an opportunity to monetize IGT’s market leadership in the Italian proximity payment business at an attractive value as we continue to execute our long-term strategy,” said Vince Sadusky, IGT CEO. “Streamlining our products and solutions portfolio enables us to focus our efforts and resources on our core and strategic assets, as we position IGT for industry leadership and increased shareholder value.” The deal was completed in September.

MGM Resorts’ online unit BetMGM announced the purchase of Sweden’s LeoVegas in May this year for about $607 million. Commenting on the acquisition, MGM Resorts CEO & President Bill Hornbuckle said the deal was a strategic opportunity allowing it to expand globally. “We have achieved remarkable success with BetMGM in the U.S., and with the acquisition of LeoVegas in Europe we will expand our online gaming presence globally.? We believe that this offer creates a compelling opportunity that allows the combined teams of MGM Resorts and LeoVegas to accelerate our global digital gaming growth and fully realize the potential of our omnichannel strategy,” he said. The deal was completed at the end of August.?

Focus on opportunities in Malta

Join us: 14 – 18 November 2022 MALTA
Being one of the first European countries to regulate the gaming sector, Malta is a hub of global business. The island is an obvious choice for SiGMA’s presence in Europe and a strong foundation for the field’s future. With a plethora of prospects for both investors and entrepreneurs looking to shape the future of this multi-billion dollar business, Malta Week will bring together industry giants among the affiliates, operators, and suppliers of the gaming sector. Our networking activities, including the extra cultural excursions, dinners, and networking drinks are solely open to Premium and Platinum ticket holders. Choose your ticket type?here.

SiGMA – World Gaming Festival – SiGMA 2022: MFCC, Malta

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