Why OpenBet Lost $400 Million In Value In Last 10 Months

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Endeavor and Light & Wonder have agreed to knock $400 million off the price of OpenBet.

Endeavor, the owner of data supplier IMG Arena, first agreed to buy OpenBet for $1.2 billion in September 2021.

However, the company revealed in SEC filings Thursday the price had been knocked down to $800 million – a 33% reduction.

Changing sports betting M&A market

Endeavour did not specify the reason for the new price tag.

However, analysts at Truist said they were “not surprised given depressed sports betting valuations.”

Truist noted other valuations in the space were down 70-80%. Bellwether stock DraftKings is down ~80% in that time.

Details of revised OpenBet deal

Light & Wonder (LNW), formerly Scientific Games, will now receive $750 million in cash and $50 million of Endeavor equity.

That is down from $1 billion in cash and $200 million in stock.

LNW said it secured a “strong valuation in the current market.” The revised terms also smooth the path to closing, LNW said.

“Endeavor is the right partner for OpenBet and the amended agreement increases speed and certainty by creating a simplified path to closing the transaction,” LNW CEO Barry Cottle said. “OpenBet demonstrates continued momentum across their key markets and the amended terms of the transaction provide strong value for the business.”

Why is OpenBet important?

OpenBet is a crucial piece of the US sports betting market. It provides technology to multiple betting companies, including:

Why is Endeavour buying OpenBet?

Endeavor plans to combine OpenBet with IMG to create a one-stop shop for operators to get data feeds, pricing and sportsbook tech.

Endeavor CEO Ariel Emanuel called the acquisition the “perfect complement” to the IMG 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,” Endeavour CEO Ari Emanuel said when the deal was first announced.

What next for B2B?

The discount might also reflect some uncertainty about the future of suppliers in US sports betting. The largest operators have all sought to own their technology, including:

Just this week, OpenBet customer Betfred said it was looking forward to moving onto its own technology in the next couple of years.

“That’s one thing we’ve learned,” said Betfred USA COO Bryan Bennett. “Not owning your platform comes with challenges. You don’t own the roadmap.”