Good morning and welcome to the latest edition of Deal Talk.

• This edition starts with the unlikely market of Belgium where market leader betFIRST has been put up for a strategic review by its media group owners. We look at whether any of the acquisitive European giants might be tempted by an M&A assault in the Ardennes.

• The transaction tracker for Q1 displays a lack of large-scale activity, suggesting the much harsher funding environment has clearly taken its toll on the hopes of the dealmakers.

• Playtech made waves in the past month with the announcement of another strategic investment, this time in Hard Rock Digital, but what does it get in return for the commercial commitment?

• Plus, the latest M&A and corporate development news from the past month, headed by Entain’s deal just last week to buy 365scores.

Ca Plane Pour Moi.

Flexing muscles in Brussels

betFIRST in Belgium could be up for sale – but who’s buying?

The Battle of the Bulge: Reports in Belgium suggested media conglomerate IPM has appointed Rothschild to advise on options for the betting and gaming arm betFIRST, which was formed in 2011 to take advantage of the market liberalization that took place the following year.

• First among equals: betFIRST is reportedly vying for second place in the market with Entain’s bwin, just behind market leader Kindred’s Unibet.

• Local newspapers suggested it generated ~€50m of net gaming revenue in 2022.

• According to the last figures from the Belgium Gaming Commission, for the year to May22, the online sports-betting market was worth €161m while retail chipped in €124m and the iCasino market generated GGR of €278m.

The history book on the shelf: Belgium has recently been the scene of localized M&A, with venture giant CVC providing financial backing to Gaming1 (which runs 777.be as well as the Circus slot halls) in Dec21, while Superbet bought out Napoleon Games in Jul21.

• IPM owns several newspapers and websites in Belgium, including La Libre Belgique and DH Les Sports+, as well as radio station DH Radio.

• betFIRST is run by Alexis Murphy, who previously ran the Ladbrokes operation in Belgium.

Dead Belgians don’t count: On the plus side, betFIRST has a podium position in a regulated market, including a retail presence in a market where advertising has recently been severely curtailed. Such attributes could make it attractive to acquirers such as Entain and Flutter. 

• Entain completed the acquisition of BetCity in next-door market the Netherlands – a simple land-grab in a newly regulated market of a successful local hero.

• However, sources suggested a repeat in Belgium is unlikely given Entain already has multiple positions in Belgium via bwin and the online and retail presence of Ladbrokes. 

• Flutter, meanwhile, is busy looking the other way as it plans its dual listing in the US.

• Similarly, Lottomatica could be interested but it is also busy attempting to complete its Milan listing at some point in the coming months.

No shop front: Another potential buyer is LeoVegas, which has its own mandate from new owners MGM Resorts to buy and build in the online sphere. But, again, sources cautioned that betFIRST’s existing retail operations might be outside of its bailiwick.

• That leaves Kindred, reportedly the current market leader; Betclic, now part of FL Entertainmen; and potentially Betsson. 

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Quarterly transactions

Large-scale M&A was scarce on the ground in Q1.

Asleep at the wheel: As with the drought of startup funding rounds announced in the first quarter, there was a dearth of large-scale deals in Q1. It summed up the somewhat somnambulant market that the best the sector’s dealmakers could manage was the $323m paid by J&J Venture Games for Golden Entertainment’s distributed games business.

🤝 The sector’s top five deals complete in Q1

🥩 Alongside the Playtech/Hard Rock deal (see below) the other significant stake-buying came from the 5% slug of Catena Media that Better Collective snapped up early in the year. No more has been said about BC’s intentions on that one.

• 🔇 Another one that has gone quiet is the reverse takeover of Meridianbet by Golden Matrix.

• Among the smaller M&A deals announced in the quarter there were two gaming affiliate buyouts.

• Tipstrr was snapped up by Planet Sports, home of Football365 and TeamTalk, while Stram Entertainment, owner of BestOdds, added BetPrep to its portfolio.

• In total, E+M tracked 16 sector-related transactions over the quarter.

Rumor mill: The gossip from the quarter included a potential $100m-$150m deal for betPARX from Fanatics Betting & Gaming and the report that the collective bookmaker owners of SIS are looking at a sale that would value the business at £200m.

Playtech’s hard dealing

The latest strategic partnership aims to emulate the success of the Caliente deal – but avoid the same legal fate.

Rock and a hard place: The big announcement from Playtech that it has signed a strategic agreement with Hard Rock Digital and taken a low single-digit percentage stake in the business in return for $85m of investment is the provider’s latest attempt to grab a foothold in the US market.

• The deal sees Playtech take on the role of iCasino platform and content supplier to the Seminole-owned Hard Rock.

• Sources suggested this also includes an exclusive around live casino.

Sunshine on leash: The key to the deal is Florida where the regulatory situation is yet to be resolved. Should the state win its legal case with regard to the gambling compact with the Seminole, then Hard Rock and its partner could find themselves as the monopoly operator in one of the biggest US states.

• Even if the compact as proposed fails in the courts, sources pointed out Hard Rock would still be, in the words of one industry source, “an extraordinarily strong competitor” in Florida.

• “That alone is a material opportunity for Playtech and Hard Rock,” said one capital market source. 

• “It’s between Disney and the Seminoles for primacy” in the business realm, said another source.

• Further, with the value of the brand and the financial backing of the Seminole, Hard Rock will likely be a successful player elsewhere in the US and internationally.

Play nice: To emphasize the planned closeness of the relationship, Playtech gave the stage at its recent investor event to Hard Rock Digital executive chairman, and former Playtech COO, Rafi Askenazi, who praised Playtech as “by far the best partner”. 

• He added he would be “very happy” if the deal were to be as successful as the agreement Playtech has with Caliente.

• That deal is now subject to a legal dispute, however, over the existence – or not – of an option for Caliente to buy Playtech out of the deal.

A percent here, a percent there: As was calculated by EKG recently, if the low-single-digit stake is 2%, it means Hard Rock is worth over $4bn. Citizens Capital Markets, meanwhile, suggested the stake was worth 3%, which would cut the valuation down to $3bn.

• Chris Lynch, managing director for gaming and leisure at Citizens, suggested the valuation is “somewhat irrelevant here”. 

• “It is an investment in return for a long-term commercial agreement with meaningful upside both domestically and internationally,” he added.

• Further, it is a “mutually beneficial” agreement. “It gives Playtech real exposure to the US and gives Hard Rock the tools to succeed both domestically and internationally.”

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The transaction month

Entain got two deals away, including 365scores – but rumors of Australian M&A still abound.

The latest score: The $150m deal for Entain to buy the media and affiliate company behind the 365scores app underlines the company’s willingness to pursue deals outside of a gambling operator’s usual remit, as it fulfills its ambition to become a wider betting, gaming, sports and media conglomerate.

• Go get them all: Sam Sadi, CEO at rival LiveScore (which itself in September secured a £50m strategic investment from Ringier) said seeking integrations with sports content apps and sites is “one such newer model” of consolidation.

• “But it does require significant investment in technology to make it work and also, let's face it, there aren't many LiveScore's out there with millions of users already interested in betting.”

In a similar vein, Entain also bought esports data provider Sportsflare in order to augment its Unikrn esports-betting proposition.

• The deal that didn’t drop, however, was the heavily rumored bid for PointsBet’s Australian trading arm, where Entain is now in pole position.

• According to sources, Entain has supplanted the Australian Betr as the likeliest bidder.

Calendar

• Apr 17: 888 investor day

• Apr 18: E+M Due Diligence

• Apr 25: Boyd Gaming

• Apr 26: Kindred, Kambi

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