• The US-based and VC-owned lottery reseller Jackpocket is the subject of strong buyout rumors. 

• Sources suggest a price tag of $750m is being attached, but as yet no positively identified buyer. 

• Speaking of prospective M&A, this edition of Deal Talk runs through a hit list of potential M&A targets for 2024. 

• Emerging regional plays could make a lot of sense in the year ahead with Brazil and Africa the subject of a lot of corporate interest.

• Lastly, in B&M gaming, M&A was the subject of questions asked during Boyd Gaming’s recent earnings call even as the company emphasized it wasn’t much taken with the sale-and-leaseback REIT model.

• Plus, breaking earnings news from Catena Media as revenues tumble.

I gotta have some of your attention, give it to me.

Jackpocket bid rumors

The big ticket: The New York-based mobile-enabled lottery reseller and latterly sweepstakes operator Jackpocket is rumored to be the subject of a ~$750m bid, with numerous names in the frame as the buyer. Having previously raised $200m in funding from a long list of venture capital funds, the operator could be a target for a company looking to enter the more casual end of the gaming market.

• New York-based Jackpocket was founded in 2013. Its last funding round came in Nov. 2021 when it raised $120m in a Series D round led by Left Lane Capital.

• Also participating were the likes of Kevin Hart, Mark Cuban and previous investors including Greenspring Associates, Raine, Anchor Capital, Gaingels, Conductive Ventures and more.

Footprint: Jackpocket is available in 18 states including New York, New Jersey, Massachusetts and Texas. It also offers sweepstakes products in those states, while earlier this month it announced it had launched iCasino operations in New Jersey.

Who’s buying? The name mentioned by multiple sources as a likely buyer is DraftKings, albeit with several caveats about the timing and the size of the deal. As one source suggested, any buyer would necessarily have to be of a certain size to contemplate such a deal.

• Another said “a lot of people have been kicking the tires” at Jackpocket “for obvious reasons.” But the source added they weren’t sure a deal was imminent.

• Another potential buyer could be Flutter, though it arguably has its hands full at present with its listing plans in the US. Also given a mention was Endeavor.

• Jackpocket didn’t respond to enquiries from E+M.

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Catena Media earnings fail

Breaking: The gaming affiliate saw revenues from continuing operations tumble by 41% to €14.6m while adj. EBITDA cratered, down 88% to a mere €1.5m. The company also took a €35m impairment charge related to the completion of a strategic review, which saw it offload most of its ex-North America business.

• Er, was this the plan? Revenue from North America fell 43% to €12.3m, comprising 85% of total revenues.

• In FY23, revenue from North America fell 21% to €67.1m out of total revenues from continuing operations that were down 22% to €76.7m. 

• FY23 ad. EBITDA was down 47% to €25.4m

Take a load off: Recall, Catena completed the offloading of its European affiliate operations within the sale of the SuperScommesse business to Oddschecker for €19.8m. In total, the affiliate made €76m of divestments including the AskGamblers business, which it sold to GiG for €45m.

Brave face: Catena said it expected a “resumption of organic growth” in H2 and has set a target for adj. FY24 EBITDA of €20m-€30m. The company said it hoped to “reinvent” itself via initiatives such as investing in AI, paid media and sub-affiliation.

+More deals

Le big one: Despite Kindred having been publicly for sale ever since a strategic review was announced last April, the $2.8bn bid from FDJ still came as something of a surprise.

Over the line: Super Group, the company behind the Betway and Spin brands, has completed the sale of the B2B elements of its US-facing Digital Games Corporation business to Games Global for an undisclosed amount.

• The transaction was first announced in February last year and was intended to complete in H2 of last year.

Golden Matrix shareholders will meet on March 19 to vote on the proposed $300m purchase of Meridianbet, which will operate as a wholly owned subsidiary. The acquisition would give GMGI access to B2C iGaming ops for the first time.

Last week, Gaming & Leisure Properties announced the acquisition of the real estate assets of Tioga Downs Casino Resort in Nichols, New York, from American Racing & Entertainment for $175m.

Allwyn has agreed to buy a controlling 70% stake in Instant Win Games.

As part of its pivot to B2B, player trading startup Mojo has sold much of its platform to social betting and sweepstakes operator Fliff.

Consolidation games

Selection headaches: Gaming M&A is set to be as buoyant as in past years with the usual suspects of regulatory change, market dynamics and tech developments driving consolidation in an increasingly globalized sector.

• New markets: The regulation of betting and gaming in Brazil has got everyone excited. 

• Flutter and others can be expected to attempt to buy their way into the market, with leading independent operators such as EstrelaBet and KTO Group likely to be on the radar. 

• Many commentators have suggested the Brazil online market will see an accelerated land grab, with several less-heralded names being snapped up by leading US and European operators.

Bolt from the blue: Flutter and Entain have both grabbed the M&A headlines in recent years acquiring smaller ‘national champions’ across Europe and further afield. With Entain likely to be quiet this year and Flutter, for now, seemingly busy with its US listing plans, it leaves room for others to look to buy then build.

• Names in the frame as potential acquisitions include Serbia’s Mozzartbet and even Novibet, which failed to float last year and could end up as either predator or prey.

• Meanwhile, 888Africa’s barnstorming success has brought the potential of Africa into the spotlight. 

• There are several strong local operators, with Nigeria’s Nairabet among the most attractive. 

American Dream: The dominance of FanDuel and DraftKings has left the US market with a whole heap of understrength operators, which might follow the lead of Kindred and flee the market at any time.

• The licenses and databases of the likes of Super Group might have some value. Notably, the company’s recently completed sale of the B2B side of its Digital Gaming Corporation to Games Global (see above) gives a hint to the residual value.

• But Rush Street Interactive has made enough of an impact to make it truly attractive to someone looking to bolster their iGaming muscle. 

• Rush Street’s interest in Latin America adds a potential kicker. It has a leading presence in Colombia and a nascent presence in Mexico, where revenue was up 90% in the last reported quarter and is growing at double the rate that Colombia did from launch.

Finding the next LeoVegas: The US market has been slow to legislate iCasino, but hope for further states – Maryland, for example, or even New York – means interest remains high in both B2C and B2B opportunities.

• MGM CEO Bill Hornbuckle has made it plain his company’s ambitions don’t end at LeoVegas.

• It has already added Push Gaming, and Hornbuckle has subsequently mentioned the company remains interested in live casino, in particular.

Those looking further afield – and with an appetite for gray (or black depending on your point of view) market goodies – might look towards those operators taking money out of Japan. Here, Hero Gaming and Casumo (and Bally’s Gamesys, of course) have carved out very successful operations in the land of the rising sun. 

• Either could provide a slightly more palatable gateway into Asia than China’s countless black market operators.

• Following hard on the heels of 32Red, LeoVegas and others, come the likes of Mr Q, Rootz Ltd (Spinz Casino) and SkillOnNet’s PlayOJO.  

Back to basics with B2B: Evolution and Light & Wonder have driven much of the consolidation in the games arena in recent years, and you can never rule out Playtech from snapping up an emerging games supplier or technology provider. 

• The aforementioned Games Global could also be a buyer depending on its appetite following the DGC deal.

Take flight: As with B2C iCasinos, successful independent games suppliers do not tend to stay independent for long and few have been as successful as Spribe in recent years. The crash games supplier best known for the Aviator game is rumored to make “untold millions” in Latin America and Africa. 

• It would make for a tasty morsel for live casino giant Evolution should it look to put its own cash pile to use. 

• Hacksaw Gaming is the latest hot young thing in the slots space. Only Pragmatic Play took more votes from players at Bigwinboard’s prestigious consumer awards last year.

Meanwhile, everyone is expecting more consolidation in the RegTech space, but growth in this area has perhaps been slower than the regulatory environment might have promised. 

• That said, Risk Cherry’s GLI alternative seems to be growing at pace as is data specialist Future Anthem.

And finally: After selling its US business to Fanatics, PointsBet retains an Australian business that will likely be picked off sometime soon. 

• As per the top story today, there is also likely to see some consolidation in the lottery betting space. 

• Annexio (LottoGo.com) has licenses in the UK, Australia, South Africa and Ireland that could make it attractive. 

• With only 2-3% of revenue coming from gray markets, it would be a very simple acquisition to make.

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M&A lifeboyd

REIT petite: A major theme in the B&M world has been the moves to make large parts of the US casino stock move to a sale-and-leaseback situation via deals with REITs. But as was noted by the analysts after Boyd’s recent earnings call, it is a path that the regional gaming operator remains unlikely to follow.

• “I think people who listen to these calls generally know that we’re not necessarily large fans of doing opco/propco with our existing assets,” CFO Josh Hirsberg told analysts.

• But this didn’t preclude the company from taking on M&A where a REIT was already in place, he added.

• “We have been willing to do it and consider it as part of a tool for financing acquisitions, whether they’re existing tenants of a REIT or otherwise,” he said.

Not biting: Asked whether any M&A was on the horizon, CEO Keith Smith said “if something interesting happens to come up, we’ll take a look at it” but added that Boyd had always been a “very disciplined acquirer of assets.” 

• If tempted, he suggested larger deals were more likely than smaller acquisitions.

• “Given our breadth, and our geographic breadth, where we go is important,” he added. 

• “It’s got to be a market that makes sense for us. It’s got to be strategic. It’s got to be a strong market.”

It left the analysts pessimistic over there being any moves being made this year. ”Barring distressed situations (limited) in strategic geographies, where synergy opportunities could present themselves, we view near-term M&A as unlikely, despite what are likely organic growth challenges in 2024,” said the team at Deutsche Bank.

Calendar

• Feb 13: MGM Resorts International

• Feb 15: Betsson, Penn Entertainment, DraftKings (earnings)

• Feb 16: DraftKings (call)

• Feb 20: Caesars Entertainment

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