- US Online Poker
- US Online Casinos
- US Online Sports Betting
While many gambling companies are branching out, Scientific Games is looking to hone its focus. It made a concrete step in that direction on Tuesday, announcing the sale of its sports betting business, OpenBet, to Endeavor Group Holdings, Inc.
Its name may not be as familiar to some readers as customer-facing brands. Nonetheless, Scientific Games is behind many popular slots, digital table games and iLottery products in the US. It also supplies account management platforms, aggregates content from other suppliers, and provides lottery services. It sees focusing on the casino-related products as the most lucrative way forward, however.
The company announced over the summer that it was looking to sell off its sports betting and lottery arms in order to concentrate on iGaming. It has now managed the first half of that through the deal with Endeavor. The latter, a global sports and entertainment company, will pick up OpenBet for $1 billion in cash, plus $200 million in Endeavor stock.
Scientific Games CEO Barry Cottle said that the transaction represents “the culmination of a thorough process” to sell off OpenBet and provide value for shareholders.
The transaction is a significant milestone towards optimizing our portfolio and de-levering the balance sheet to enhance our financial flexibility. It will position us to invest both organically and inorganically in key growth areas, particularly in content and digital markets. We are delivering on our promises and executing on our strategy to transform our company and unlock significant value for employees, customers and shareholders.
Endeavor has been a publicly traded company since April. Its shares rose about 6% on news of the OpenBet acquisition. Scientific Games investors seemed indifferent, or may have anticipated the news. Its price barely moved on Tuesday, but has more than doubled in value over the past six months.
On Endeavor’s end, the focus of the deal seems to be synergy with its subsidiary IMG Arena. Like Scientific Games, IMG Arena is a B2B company, albeit one with a more narrow focus.
At the moment, it provides sports content for sports betting operators. This includes things like official data and live streams of events. It also uses technology from another Endeavor subsidiary, Leap Gaming, to offer virtual sports products to its customers.
In the US, its focus at the moment is on a product called the Golf Event Centre. Through an official partnership with the PGA, this aims to create a full featured golf betting experience with shot-by-shot data, in-play betting lines and live streaming. As of March, it counts BetMGM Sportsbook among its clients.
Through the acquisition of OpenBet, it should be able to make itself a one-stop shop. Endeavor and Scientific Games expect to complete the deal in Q2 next year. At that point, IMG Arena will have an end-to-end solution comprising the OpenBet back-end platform and its own front-end bells and whistles.
Endeavor CEO Ariel Emanuel said:
OpenBet marks a strategic addition to our sports betting portfolio as we look to round out our technology and product offering for sportsbook operators and sports brands worldwide. The combination of OpenBet and our IMG ARENA business will enable us to expand our footprint across the entire sports betting value chain and further capitalize on the tremendous upside we see coming from this fast-growing global industry.
Theoretically, Endeavor could take vertical integration one step further. It won’t just own a sports betting platform and a content delivery service for sportsbook. It also owns a great source for the content itself.
In 2016, while still privately owned, Endeavor led a group of investors to buy the Ultimate Fighting Championship. This March, as part of its preparations for an IPO, it spent $1.75 billion to buy out its partners and consolidate ownership of the UFC. Around the same time, it added Elon Musk to its board of directors.
Exactly how Endeavor plans on putting these pieces together remains to be seen. It’s hard to imagine that it doesn’t have plans to work the mixed martial arts franchise into its sports betting empire in some form, however.
UFC hasn’t shied away from sports betting. According to some of its own fighters, it doesn’t even mind if they bet on their own fights. Since 2017, its home base has been T-Mobile Arena in Las Vegas, so its connections to sports betting culture run deep.
Indeed, UFC has even made one past attempt to get into the gambling space itself. Back in 2013, it launched the first legal online poker room in the US, Ultimate Poker. That experiment folded the following year.
It can’t have helped that its name resembled that of Ultimate Bet, the site Russ Hamilton infamously used to cheat players out of many millions of dollars. If Endeavor does see a UFC-related sports betting product in its future, let’s hope it shuns that particular combination of words.