• M&A bonanza led by multi-billion dollar deals involving Apollo and Flutter.

• … while FDJ completes the acquisition of Kindred.

• The Light & Wonder employee who developed Dragon Train has left the company.

• A timely boost for the Macau gaming sector ahead of Golden Week.

• The opportunity in the UAE is underappreciated, says Morgan Stanley.

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M&A bonanza

Back to the office: Dealmakers and bankers involved in the betting and gaming space found themselves locked in conference rooms and Zoom calls rather than sunning themselves by the pool going by the blockbuster $11bn+ of deals announced over the summer.

Summer breeze: Sector M&A activity in Q3 was led by the monster $6.3bn takeover of the IGT/Everi combination by private equity giant Apollo announced in July and Flutter’s €2.3bn deal for Snaitech from just last month.

• In total there were 19 deals notched up over the three months with the publicized sums involved reaching $11.1bn.

• Sector-adjacent deals include Playtika’s $700m takeout of rival SuperPlay.

• Also in the top five is Caesars’ sale of the IP rights to the World Series of Poker for $500m to NSUS, the owner of GGPoker.

• Flutter makes a second appearance in the top six with its $350m deal for a majority stake in Brazilian operator NSX, which owns Betnacional.

• The list doesn’t include Bally’s take-private deal in July, which saw major shareholder Standard General grab control of the business.

Sizzling: Other notable deals outside the top six include DraftKings’ buyout of the 75% of micro-betting operator Simplebet that it didn’t already own. Alongside Caesars acquisition of ZeroFlucs, it shows interest in adding elements of the OSB value chain remains high.

• Also under the radar, Stake.com made a splash in July with the acquisition of IdealBet in Italy, representing another move towards the regulated market for the crypto-led operator.

• Meanwhile, sweepstakes operator VGW announced in its recent annual report that it has bought a 14% stake in 99 Dynamics, the UK-based company behind Jackpot.com.

More to come: Talking about their upcoming meetings at G2E next week, the team at Macquarie said they “anticipate many conversations around the recent wave of announced M&A and the subsequent change in market dynamics as a result.”

Now I’m interested: The easing interest rate environment in the US provides the backdrop for more deals with the conditions for raising cash now more amenable.

• “Sector M&A has historically been healthy and we believe could accelerate in a lower interest rate environment, improving overall sector investor sentiment,” said the team at B Riley in a note in late September.

💰 In the money: the top deals in Q3

And here’s one we made earlier

Taking over: La Française des Jeux has completed the €2.5bn acquisition of Unibet operator Kindred after it announced it now controlled over 90% of Kindred’s shares.

• FDJ said it is extending its offer until October 18 to enable Kindred shareholders who have not tendered their shares to do so on unchanged terms.

We are champions league: FDJ said, with the deal now complete, a new “European champion” has been created with a diversified portfolio of the French and Irish lottery monopolies and OSB and iCasino activities across Europe. By revenue, 27% of the company’s business is now ex-France.

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Caesars Entertainment has priced up an upsized $1.1bn of new notes placed with institutional investors via a private placement this week. The new money will be used to pay off a portion of existing debt due in 2027.

Golden Matrix has adjusted the earnout structure for its previously completed $300m buyout of Meridianbet with MB founder Aleksander Milovanović receiving 40% of the total amount due to him in shares rather than cash. 

• Additionally, 40% of the cash due to CEO Zoran Milošević and 20% of the cash due to CFO Snežana Božović will also be converted into shares.

Read across

‘Officially. Finally.’ The legal to-ing and fro-ing over election-based prediction markets in the US appears to have been resolved after a US appeals court denied the Commodity Futures Trading Commission’s attempt to shut the trade down. In Compliance+More.

Get on up: Hopes are high that the decentralized prediction market SX Bet will see its deeply underwater token resurface, as evidence grows it is gaining ground in the on-chain betting space. In The Token Word.

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The big move: The person behind Light & Wonder’s controversial Dragon Train game has left the company’s employ, CEO Matt Wilson confirmed via a video statement released late yesterday.

• Recall, the company’s shares were hit last week after rival Aristocrat was granted a preliminary injunction after claiming L&W “misappropriated” trade secrets.

• The Truist team said they believed the injunction was related to “this designer and the game Dragon Train.”

• In the video statement, Wilson said the legal action only related to elements of the game. “Our intention is to build out Dragon Train 2.0, in compliance with the order,” he said.

Paul Gauselmann, the founder of the German-based slots business Merkur Gaming who turned 90 in late August, is stepping down as chair of the management board and handing over the reins of the company to current CFO Lars Felderhoff. 

Brandon Moore has been promoted to the additional role of president at Gaming & Leisure Properties to add to his current title of chief operating officer. Moore has been with the business near enough since its inception in 2014.

Stella David has officially succeeded Barry Gibson as chair at Entain having previously stood in as interim CEO.

Genius Sports has appointed Mark Kropf as CTO. Kropf was most recently technical director at Google within the company’s office of the chief technology officer.

OPAP CEO Jan Karas will take on an expanded role as chair. Karas has served as CEO since 2021 and replaces Kamil Ziegler, who is stepping down for personal reasons after serving as chair since 2013.

• HR Manager – Barcelona 

• Product Manager – Remote in Asia

• Payment Solutions Manager – Toronto 

Snap back

Stay gold: Record visitation to Macau in the first two days of the Golden Week holiday appear to provide immediate evidence that the gaming market is set to benefit from the economic stimulus measures introduced by the Chinese government last week.

• The Macau Government Tourism Office now expects average daily visitor arrivals during Golden Week, which runs this year from October 1 thru October 7, to come in at over 130k.

• This would represent a new record for the holiday week.

• The figures for the first two days show over 304k of arrivals, with over 166k on day one, which is the second highest one-day figure for the year.

This time it’s different: Recall, Macau-related stocks enjoyed a stunning return to form late last week, with Galaxy Entertainment, Wynn Resorts and Las Vegas Sands all enjoying 20%+ share price gains. 

• This came after the Chinese authorities announced a raft of economic stimulus measures designed to bolster consumer confidence.

• The analysts at CBRE said they were the “most aggressive since the pandemic.”

• The measures are mainly aimed at stabilizing China’s real estate market, but the CBRE team argued that “more direct fiscal stimulus aimed at spurring demand and consumption” could follow.

Green for go: Earlier this week, the team at Macquarie said the mood music around China’s moves has “improved sentiment” around Macau-related stocks. The CBRE team said the package of measures was a “greenlight for investing” in Macau.

• They suggested the company set to benefit the most is Las Vegas Sands, which has seen its share price soar 33% in the last month.

• The company has the “largest hotel room inventory and retail footprint in Macau to capitalize on increased demand and visitation to Macau,” CBRE added.

The latest data for September showed a 15.5% YoY increase with the GGR figure of $2.15bn representing just over 78% of the September 2019 figure. 

• The team at Seaport noted that September was a seasonal low for Macau but that the indications leading up to Golden Week were strong.

🔥 Las Vegas Sands enjoys a golden September

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Analyst takes – UAE

No mirage: The opportunity in the United Arab Emirates is underappreciated, according to the team at Morgan Stanley, who suggested that historically new markets with limited supply have generated outsized returns.

• As such, the team noted Wynn’s Al Marjan project will have “similar demographic trends to Singapore” while Wynn will be the only operator for at least three years and possibly up to five.

• In that period, the MS analysts said the project could be generating revenue at maturity by year three of ~$1.8bn and adj. EBITDA of ~$500m.

• The team noted this comes with revenues for Wynn Las Vegas of $2.5bn last year and adj. EBITDA of $945m.

More takes

Churchill Downs: After meeting with management, the analysts at Truist said they came away convinced there is more “meaningful upside” to come from the continuing Kentucky Derby projects while the HRM sector continues to motor on.

• Ongoing renovations will see ~8,300 seats added alongside more amenities for a further ~2,800 guests.

• Truist said management expects the costs to be $80m-$90m with a payback period of less than eight years.

Maximum capacity: In the HRM space, expansion plans in Kentucky are on track, while in Virginia Churchill Downs told the team it was confident of being able to deploy the 5k machines permitted under law.

• Management reiterated the message from the last earnings that the company “remains alert” for new forms of illegal skill-based gaming.

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Earnings calendar

• Oct 17: Entain

• Oct 23; Churchill Downs (e)

• Oct 24: Betsson, Evolution, Boyd, Churchill Downs, GLP

• Oct 25: Kindred

• Oct 29: Caesars Entertainment

• Oct 30: MGM Resorts

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