GIG’s acquisition of the sportsbook solutions provider Sportnco and NeoGames’ takeover of Aspire Global shows that medium-sized suppliers of online betting and gaming solutions are looking at different ways to expand.
GIG’s $50m purchase of Sportnco ($27.3m paid in cash) provides it with a sportsbook solution that is well established and accustomed to highly regulated markets and both groups’ geographical coverage is deemed highly complementary.
The deal marks another stage in the transformations the two firms have undergone in recent years (see boxout), but the key takeaway is that both groups are highly complementary in terms of both geographical coverage and products.
NeoGames’ acquisition of Aspire Global for $480m bears similar characteristics. It extends NeoGames’ addressable market both in terms of product and geographically and analysts have observed that it will enable the group to offer Aspire Global’s online betting and gaming solutions to its existing lottery clients. Potentially this could open up a new segment of highly lucrative contracts for Aspire Global.
GIG is strong in online casino in northern and eastern Europe, while Sportnco is the B2B leader for sportsbook solutions in Spain and France, it is active in Belgium and recently launched in Greece.
Sportnco also acquired the Spanish gaming aggregator and player account management (PAM) specialist Tecnalis a year ago, which has provided it with a complete turnkey (sportsbook and PAM) solution that has a strong position in Spain. It will soon be launching in Portugal and is active in Latin American markets such as Peru, Colombia, Argentina and Paraguay via its Alira platform and PAM system.
Two-way street
In terms of corporate development, Richard Brown, CEO of GIG, was clear about the rationale behind the acquisition. “For our platform we see an increase in scale and profitability, addressable market and cross-sell looking to enter markets where Sporntco is active – and vice versa,” he said during the company’s webcast discussing the deal.
In practice that could lead to two-way traffic that would see Sportnco offer its sportsbook solutions to GIG customers in, for example, the UK and Nordics; and GIG go the other way and provide its online casino or PAM solution to Sportnco clients in southern Europe and Latin America.
Key U.S. market
The U.S. of course is a key market and Brown was clear that being able to put Sportnco forward as its sportsbook platform will allow GIG “to pursue with force sportsbook-focused markets such as the US” and “to go after prospects that are sports and sportsbook-led” such as media companies and/or operators working with a different platform provider.
Aspire Global CEO Tsachi Maimon has also been vocal in his stated aim of signing up tribal casinos to his company’s platforms. Commenting on the U.S. at the time of the company’s Q3 results, he said the market was much larger than just tier 1 brands and was clear about where client wins would come from. “Most (retail) casino GGR comes from tribal revenues, who don’t have a clue how to operate digital. The tribal casinos, tiers 2, 3 or 4, in a few years from now Aspire Global will be their biggest supplier.”
The fact that most U.S. jurisdictions are “sportsbook-only markets” and have so far shown little willingness to push for regulation of online casino products means GIG’s ability to offer an established sportsbook platform becomes that much more important if it wants to build a footprint of consequence as a B2B supplier in the U.S.
Currently neither company has a big U.S. footprint, Sportnco provides a free-to-play sports betting product to SuperDraft, the DFS operator acquired by Caesars a year ago; GIG supplies the Playstar online casino in New Jersey and in September 2020 agreed to a mutual termination agreement of its platform and sportsbook partnership with Hard Rock International.
However, while the U.S. is important, GIG and Sportnco will first expand in markets where they are either already active or can do deals relatively quickly.
Changed B2B landscape
The landscape for B2B competitors has also changed substantially in recent years. SBTech’s integration into the DraftKings infrastructure has led to a near-complete focus on B2C activities for a group that powered many betting brands.
As a result many betting solutions providers are moving in on operators that are either coming to the end of their contracts with SBTech or just want a B2B-focused supplier.
In the US, Kambi has also seen its two biggest clients, DraftKings and most recently Penn National/theScore, decide to go for in-house tech stacks. Those moves mean increased opportunities for Sportnco to fill the space vacated by those two suppliers. No doubt Kambi will have something to say about that, but for GIG-Sportnco the direction of travel is clear.
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B2B focus
For GIG, the Sportnco takeover is another corporate pivot towards being a B2B-focused supplier to online gaming and betting operators.
The group has restructured its operations gradually over recent years. In February 2020 it sold its consumer-facing icasino brands Rizk, Guts, Kaboo and Thrills to fellow Nordic operator Betsson and will continue to service the brands for Betsson. GIG still has some B2C affiliate activities and via the media and search division of the company that generated €11.2m of its €17m Q3 revenues. The Sportnco deal is part of a project to rebalance those income streams towards more B2B revenues.
For its part Sportnco has always been a B2B-focused group, but its launch in 2010 included the B2C sportsbook France Pari, which was also the name of its holding company. Since then its revenues have come mainly from B2B and it changed its name to Sportnco Gaming Group last month to illustrate this emphasis and put the accent on the international nature of its activities.
