Navigating the New Landscape: M&A Opportunities for Betting Platforms Kambi and OpenBet in a Changing Market
In the evolving landscape of sports betting, the pace of mergers and acquisitions (M&A) among major operators is experiencing a notable slowdown. As incumbents like Kambi and OpenBet navigate this complex environment, operators are increasingly gravitating towards smaller, specialized technologies to enhance their sportsbooks. This shift raises important questions about the future of M&A opportunities in the betting sector.
Recent Speculation Surrounding Kambi
In September, rumors surfaced suggesting that Genius Sports was considering a takeover of Kambi Group. Both companies swiftly dismissed the speculation, but the mere talk of a potential acquisition resulted in a brief dip in their share prices as the market weighed the implications of such a deal. Industry insiders noted that this may not be an opportune moment for Kambi to pursue a buyout, particularly as it transitions under new leadership following the appointment of CEO Werner Becher.
Analysts at Swedish investment bank ABG Sundal Collier indicate that Kambi has been on the market for some time. In a communication sent out in June, they identified MGM Resorts as a potential buyer for Kambi, especially in light of MGM’s acquisition of Tipico’s US betting platform, which aimed to facilitate its entry into Brazil and enhance its European offerings.
The Landscape of Betting M&A
Despite the intrigue surrounding potential acquisitions, experts contend that the era of large-scale B2B consolidation is waning. M&A advisors indicate that the market has shifted dramatically since the peak of 2021, when multi-million dollar deals became commonplace. Operators are now less inclined to acquire substantial businesses laden with complex components. The landscape today is more favorable to smaller, niche players that offer targeted technologies.
Matt Howard, a partner at consultancy Propus Partners, suggests that operators have shifted towards smaller, highly specialized technology investments. Recent trends show a preference for companies equipped to deliver unique, high-margin products like same-game parlays (SGPs) and in-play betting features, rather than obtaining extensive tech solutions that require significant long-term assets and management integration.
OpenBet’s Position
While Kambi has made it clear that it is not seeking acquisition, OpenBet finds itself in a different position. Following a strategic review, parent company Endeavour announced in August that OpenBet does not align with its future strategy, making the provider openly available for sale. This openness presents an opportunity for potential buyers, particularly as other significant brands in the market have also been acquired.
The M&A adviser pointed out that recent moves illustrate the finite nature of operator-driven acquisition strategies, highlighting a clear pivot away from past strategies, where obtaining large B2B clients was prioritized. As operators have absorbed smaller entities or built in-house solutions, the appetite for large acquisitions has diminished.
A Shift Towards Private Equity
As operators show reluctance to acquire larger suppliers, private equity firms may emerge as the most viable buyers. Both Kambi and OpenBet are viewed as attractive options due to their profitability and regulation compliance. Notably, the gaming sector has witnessed a recent uptick in private equity transactions, as firms like Apollo Global Management have successfully acquired gaming suppliers.
Industry experts see the potential for significant growth in regulated markets, particularly as Brazil prepares to launch its licensed betting sector in January 2025. Kambi has already signed agreements to power local operator KTO’s sportsbook, while OpenBet has secured partnerships with major media entities to deliver online betting products. These moves underscore the potential for supply-side growth as the market matures.
The Future of Supplier M&A
While the current climate for M&A in the betting industry remains cautious, analysts believe opportunities exist for specialized, tech-driven acquisitions. The focus is increasingly on enhancing profitability and operational efficiency, leading to investments in innovative technology rather than bulk acquisitions.
Industry experts argue that suppliers could explore breaking down their offerings into separate components to cater to various market demands. This approach could lead to Kambi and OpenBet evolving their business models, potentially selling specific technologies individually to better align with the needs of operators looking for targeted solutions.
In conclusion, as the betting landscape continues to evolve, Kambi, OpenBet, and other major players must adapt to changing market dynamics. While large-scale consolidation may be on the decline, the future of M&A may present diverse opportunities for smaller, innovative technologies that cater to the specific needs of the rapidly growing sports betting sector. As Brazil’s market preps for licensing, both companies are poised to capitalize on burgeoning regional demand and establish lasting partnerships.