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US Sports Betting M&a That Could Happen in 2022: DraftKings, Fanatics – Business Insider


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Michael Rubin

Michael Rubin.
Mike Coppola/Getty Images

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  • The M&A boom in US sports betting could pick up speed in 2022.
  • Insider asked sports and gaming-industry bankers and execs how deal talks could play out.
  • Crypto could enter the fray, Fanatics could make a big buy, and consolidation will likely continue.

The bubbling US sports betting M&A market is reaching a rolling boil.

As sports-betting legislation rolls out across the country, and investors pump money into the burgeoning industry, experts think dealmaking in the sector will continue to heat up next year.

“You’ve got a lot of capital, 200-some-odd SPACs out there, and billions of liquidity looking at investing in technology and media,” said Chris Bevilacqua, CEO of SimpleBet and cofounder of Bevilacqua Helfant Ventures. “The combination of those things is going to lead to more M&A and further consolidation.”

2021 was marked by deals including DraftKings’ $1.56 billion acquisition of Golden Nugget Online Gaming, Penn National Gaming’s $2 billion deal for Canada’s Score Media and Gaming, Bally’s Corporation’s $2.7 billion purchase of online-gambling company Gamesys, and Caesars Entertainment’s roughly $4 billion deal for UK bookmaker WilliamHill.

Insider spoke with 10 sports-betting bankers, advisors, and executives about the M&A trends, buyers, and targets to watch in 2022.

The people said US gambling operators will continue bulking up their assets. They’ll likely snap up media and daily-fantasy sports companies to extend their reach, buy tech companies to differentiate their products, and diversify into areas like online gambling or horse racing.

But the conversation at companies like Wynn Interactive is also shifting away from acquiring users at any cost — including billion-dollar ad budgets — and toward profitability and customer retention. 

“People are paying a premium if they can recharge their course to profitability and differentiation,” said Yaniv Sherman, ​​SVP and head of US at 888 Holdings, which runs the SI Sportsbook. “These are the things that matter over the next three to four years.”

The sky-high market caps that many of the top publicly traded US sports-betting companies had earlier this year have dropped down in recent weeks. Stocks including DraftKings, Golden Nugget, Bally’s, and Penn National Gaming are down double digits from last month.

The change could spur more deals for cash-flow-driving businesses. For instance, Bally’s acquisition of Gamesys gave the Las Vegas casino company a gambling platform, as well as a profitable European gambling business, and DraftKings’ dropped bid to buy Entain could have done the same.

“Acquiring cash flow is going to be more and more important,” said Ramy Ibrahim, managing director at Moelis & Company. “Any time you can complement cash flows with hyper-growth topline market share, that’s incredibly helpful.”

And it’s not just gaming companies that will pour cash into the sector, but also firms like streaming -TV provider FuboTV and sports merchandise giant Fanatics. They’ll likely need to buy rather than build from scratch, starting this late in the game. (Case in point: FuboTV bought gaming upstart Vigtory last year.)

The wave of SPACs that touted plans to pursue companies in the sports, technology, and gaming sectors will also have to follow through on them soon.

And, as the universe of available media targets gets smaller following the recent boom of M&A activity, talent-driven pacts could be the new deal du jour. FanDuel recently signed an eye-popping $120 million four-year contract with sports analyst and former NFL player Pat McAfee, for example.

Ultimately, the industry is bracing for the moment when the lion’s share of the country has legal access to sports betting, which could come in the next two years as New York brings mobile sports betting online and Texas takes up the topic in its next legislative session in 2023.

“M&A activity next year is all getting ready for 2023,” said Rick Wolf, senior vice president of business development at Spotlight Sports Group.

DraftKings: the race to the first super operator

DraftKings cofounders

DraftKings cofounders Paul Liberman, CEO Jason Robins, and Matthew Kalish.
Angela Rowlings/MediaNews Group/Boston Herald

DraftKings kickstarted the race to become the US’s first “super” gambling operator last year when the daily-fantasy-sports company bid $22 billion to buy Entain. 

The European gambling operator would’ve given an international foothold to DraftKings, which has one of the top sports betting apps in the US and is acquiring Golden Nugget Online Gaming to build an online-gambling business.

DraftKings ultimately dropped its bid for Entain, and chief business officer Ezra Kucharz told Insider that he’s focusing on “winning in North America.” The company is looking to solidify its already sizeable lead as one of the top two operators in the US, as the marketplace gets more crowded.

But DraftKings is still looking for deals that help boost its audience and reach as it seeks to become the “Amazon of sports and entertainment.”

Based on DraftKings buying patterns, it could pursue: 

  • Another media company like VSIN, which it acquired last year. The Information reported in November that DraftKings bid to buy The Athletic.
  • A software company like Blue Ribbon that can help enhance its product features. Its 2021 purchase of Blue Ribbon helped DraftKings to introduce jackpots.
  • A business that could help DraftKings continue to expand into adjacent industries, like horse racing or online poker.
  • A blockchain-based company that could jumpstart its efforts in NFTs and digital collectibles. CEO Jason Robins is a self-described “big NFT bull” according to his Twitter bio.
  • Or even a big gambling operator with a foothold in a different market, mirroring its pursuit of Entain.

Fanatics: the next challenger to watch

Michael Rubin

Michael Rubin.
Mike Coppola/Getty Images

While DraftKings led the M&A market this year, soon-to-be rival Fanatics is the buyer to watch in 2022.

Michael Rubin’s sports-merchandise company raised $325 million in August to expand into new verticals, including sports gambling. It hired former FanDuel CEO Matt King to run the betting and gaming unit, which has since made other high-profile hires in the space.

As a latecomer, Fanatics knows that it’ll need a best-in-class product to convert its database of 80 million sports fans into gamblers. Speculation has been swirling around what the company will buy to underpin its sports-betting platform.

In September, the Action Network reported that Fanatics had met with Rush Street Interactive and Swedish company Betsson, and might buy one of them. But Fanatics didn’t comment on the report, and no deal has been announced.

“Fanatics is a very interesting story to me,” Bevilacqua said. “They clearly have the capital and the resources. And they’ve got an existing customer base through their online merchandising business … That’s a disruptive combination.”

FanDuel: Will it go public?

FanDuel's Amy Howe.

Amy Howe.

Will FanDuel make its public debut in the US? 

European parent company Flutter talked about spinning out FanDuel and its other US operations earlier this year. 

But the conversation stalled after FanDuel CEO Matt King said he was leaving in May, and Flutter got tied up in a legal battle with Fox over the price of the media company’s option in FanDuel.

With former Live Nation chief Amy Howe installed at the helm, could a public offering be back on the table?

Access to the US public market, where gaming companies are trading at higher multiples than on European exchanges, could also allow FanDuel to go after larger deals, like its closest rival DraftKings has.

FTX: crypto is eyeing sports betting

Sam Bankman-Fried FTX CEO crypto

FTX cofounder and CEO Sam Bankman-Fried.

Cryptocurrency exchanges could be the next hot buyers, or affiliate partners, in sports betting.

Sam Bankman-Fried’s FTX, a popular crypto exchange, recently targeted Australian sports betting platform PlayUp, which has gaming licenses in New Jersey and Colorado, for a takeover. The talks went belly up. And, in a bizarre turn of events, PlayUp filed for a restraining order against its former US CEO, Laila Mintas, for allegedly blocking the deal.  

But the saga signaled crossover between the sports betting and crypto worlds.

Cryptocurrency exchanges, after all, have moved into the mainstream in recent years. And customers who are comfortable making trades online could also be attracted to sports gambling. 

“Crypto has gone from on-the-fringe to mass market,” said Ibrahim at Moelis. “If you think about their platforms and the type of people that they attract … their ability to reduce customer acquisition costs is pretty obvious.”

Another exchange,, also waded into the sports waters this year, buying the naming rights to the Staples Center in Los Angeles.   

We could see more sponsorship deals like this or even the kinds of affiliate relationships that have become so popular between media and gambling organizations. 

“Media is still going to be part of ecosystem, but in 2022 we’ll hear more talk about crypto,” Ibrahim said. 

As for FTX, the company inked a sponsorship deal with DC-based Monumental Sports and Entertainment, and could pursue other operators with US licenses company if it still hopes to make a splash in sports betting.

Disney: the ESPN owner makes a big splash in sports betting

Bob Chapek

Disney CEO Bob Chapek.
Jeff Gritchen: MediaNews Group: Orange County Register via Getty Images

Don’t expect the dealmaking frenzy with sports-gambling platforms to die down in 2022.

After dabbling in sports betting, media giant Disney says it wants to move aggressively into the space. In negotiations with third parties, Bob Chapek will likely plan to leverage the company’s reach in sports, including cable giant ESPN, streaming service ESPN+, and a vast collection of sports rights that also air on its broadcast network ABC.

The Wall Street Journal reported that ESPN was seeking a $3 billion multi-year name licensing deal with a sportsbook, and it also already has partnerships with Caesars Entertainment and DraftKings.

“Given our reach and scale, we have the potential to partner with third parties in this space in a very meaningful way,” Chapek told investors in November, adding that sports betting is an area Disney is “keenly interested in” and “pursuing aggressively.”

Beyond ESPN, the list of eligible big-name media outfits is dwindling. Brands including CBS Sports, Fox, NBCUniversal, and Barstool Sports already have exclusive deals with gambling partners in place.

“Most of the big guys have already picked their dance partners, at least in the medium term,” Ibrahim said. 

Those still on the block include The Athletic — which The Information reported has shopped itself to companies including DraftKings and FanDuel — SB Nation, and SportsGrid. Bleacher Report also hasn’t gone exclusive with a single operator, but has deals with both DraftKings and FanDuel. 

Elsewhere in media, private-equity firm Apollo Global Management bought Yahoo Sports as part of its acquisition of Verizon Media in September. Speculation is swirling around whether the firm will spin out the sports entity into a merger with a gambling operator, or find another way to leverage the assets. Yahoo Sports currently a sports partnership with BetMGM.

The Pat McAfee Show: FanDuel’s $120 million deal for the former NFL player could kickstart more talent-led deals

Pat McAfee former Indianapolis Colts on the field.

Pat McAfee.
Justin Casterline/Getty Images

Talent-driven deals could be the deal du jour of 2022. 

In December, FanDuel announced a big-ticket $120 million four-year deal with sports analyst and former Indianapolis Colts punter Pat McAfee.

The creator of “The Pat McAfee Show” built a media company with a sizeable social following after retiring from the NFL. He spent a stint at Barstool Sports before going out on his own in 2018. And he has partnered with FanDuel since 2019. 

McAfee’s latest deal comes as sports-betting platforms are looking for more kinds of affiliate partners with loyal followings to draw in subscribers and build loyalty for their brands, the way Dave Portnoy and the Barstool Sports crew have for Penn National Gaming.

Some, like BetMGM and the Caesars Sportsbook, have turned to celebrity spokespeople to plug their brands. Meanwhile, Wynn Resorts, which operates gambling platform WynnBet, invested $3.5 million into podcasting company Blue Wire to propel its sports content and access the company’s talent.

Mega influencers with ties to sports betting, like Jake Paul — a YouTuber turned amateur boxer whose VC fund is invested in microbetting startup Simplebet — could be targets for exclusive partnerships with either gambling or media companies in 2022.

But, really, all sports-betting influencers with north of 50,000 followers could be targets, said Everling, the sports gaming consultant.

In-game betting: the next hot target as production differentiation becomes key

Simplebet CEO Chris Bevilacqua poses for a portrait.

Simplebet CEO Chris Bevilacqua.

In-game betting — or wagers that can be placed in real-time on anything from how many yards the next play will go for to how many points Lebron James will score in a game — has promised sports books and broadcasters more engagement. 

Of course, the technology is still catching up to the vision. Markets and video streams need to move quickly enough to enable this kind of in-the-moment action, whether viewing at home or in the stadium.

But startups such as microbetting startup Simplebet, which has a deal with DraftKings, are starting to prove their potential. 

Software companies that help enable these kinds of microbets could also be attractive targets for operators in 2022.

“It’s going to be interesting to see who ponies up to get that next level engagement, to drive in-game betting,” said Larry Everling, a sports gaming consultant.

Fantasy sports: the category continues to be a hunting ground

Jeremy Levine, cofounder and chairman of Underdog Fantasy.

Underdog Fantasy cofounder and chairman Jeremy Levine.
Underdog Fantasy.

Fantasy sports companies are also attractive targets for gambling operators, SPACs, and other buyers in the space. 

Fantasy sports serve as a gateway to fans who might be interested in gambling, hence DFS giants FanDuel and DraftKings’ swift ascent to the top of the market share leaderboard in the US.

Over the past year, Bally’s Corporation acquired Monkey Knife Fight, Caesars Entertainment bought a stake in SuperDraft, and, most recently, Vivid Seats acquired Betcha — all aimed at acquiring a database of sports fans the companies could mine. Other fantasy sports companies are opting to upgrade to sports betting on their own. Underdog Fantasy, for instance, acquired Goat Gaming in August to expand into sports gambling, on the heels of the startup’s $10 million fundraise.

PrizePicks, ThriveFantasy, and Sleeper are some of the other big names to watch in fantasy.

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