Endeavor, the parent company of data supplier IMG Arena, is buying the Scientific Games sports betting business for $1.2 billion.
Scientific Games announced in June it would divest its OpenBet sports betting business and its lottery business to focus on its core gaming business. Options included a potential IPO or SPAC transaction, along with a straight sale.
Endeavor will pay $1 billion in cash and $200 million in Class A shares for the business instead, according to the announcement.
Endeavor – also the parent company of the WWE – becomes the new owner of some well-known operations:
- OpenBet platform
- Recently-acquired SportCast
- Trading services
Who are some of Endeavor’s new customers?
OpenBet is a crucial piece of the US sports betting market.
It provides technology used by multiple betting companies:
- BetMGM joint venture partner Entain
- FanDuel Sportsbook and Fox Bet parent Flutter
- Golden Nugget
Thoughts from Endeavor, Scientific Games
Endeavor CEO Ariel Emanuel called the acquisition the “perfect complement” to its IMG Arena business.
“With an offering that now spans the entire sports betting value chain, we expect to efficiently capture the market opportunities driven by the increased legalization of sports betting among US states and global territories,” Emanuel added on a conference call.
IMG Arena and the OpenBet business should combine for $340 million in revenue next year, excluding any synergies, CFO Jason Lublin said. OpenBet will add $150 million in proforma fiscal 2022, he added.
Jordan Levin, CEO of Scientific Games sports betting business, called Endeavor an “ideal partner” because of its deep industry relationships.
“Together, these companies will be well positioned to capitalize on emerging trends to deliver even more innovative and tailored solutions to customers as we define the future of sports betting entertainment,” he added.
Scientific Games stockholders pleased so far
Scientific Games shares saw a positive spike in after-hours trading Monday evening after the news broke.
It is a positive step for the gaming supplier, which has focused on paying down debt the past few years. The company reported $8.2 billion in net debt as of June 30.
“The transaction is a significant step towards optimizing our portfolio and de-levering the balance sheet to enhance our financial flexibility,” CEO Barry Cottle said. “It will position us to invest both organically and inorganically in key growth areas, particularly in content and digital markets.”