eGaming Mergers and Acquisitions from 2012-2017

| 28.03.18 | 0 Comments

In the last five-plus years, the eGaming industry – betting, casino, bingo, poker online operators – have scrambled to strike deals between themselves, to merge, or to acquire the business of their rivals. There are many reasons for this, including cost-cutting, operating in a saturated market and a greater focus on economies of scale in an industry which, by its very nature, must operate huge marketing budgets.

Some of the most notable mergers and acquisitions (M&As) in eGaming over the last five years:

• Paddy Power and Betfair merge in 2016, creating Paddy Power Betfair plc.
• Ladbrokes and Gala Coral merge in 2016 to form Ladbrokes Coral Group plc.
• GTECH and Interactive Gaming Software merge to create IGT.
• Amaya acquires Rational Group (PokerStars) for $4.9 billion in 2014.
• GVC Holdings buys Sportingbet (excluding Australia) for £560 million.

Now, a broader chronological guide to mergers and acquisitions in the gambling industry over the past five years. In addition, we will cover information on collapsed deals and point to some M&As that are likely to happen in the future, below:

April 2012

Amaya Group, who would later be known as The Stars Group (operators of PokerStars and Full Tilt Poker) acquired CrytpoLogic in a $35.8 million (£25.1 million) cash for shares takeover. The application service provider was one of the most established in the industry, formed back in 1995. Amaya also took over CryptoLogic’s consumer facing brands, including InterCasino.

Notable aspects of the acquisition:

• Amaya would sell CryptoLogic’s subsidiary WaterLogic for $70 million just two years later.

April 2012

William Hill PLC purchased American Wagering Inc (AMI) and Cal Neva Sportsbook Division for $39 million (£28 million). The move was part of William Hill’s plan to invest further in the United States, specifically Nevada, and the purchase gave them a combined 103 sportsbooks.

Notable aspects of the acquisition:

• AMI, formed under the Leroy’s brand, was at the time the longest-standing sportsbook operator in Nevada.
• With the deals, William Hill became the first UK bookmaker to be licensed in the US.

May 2012

Unibet acquired Nordic Betting Ltd, operator of Bet24 (online casino and poker). The deal was struck for £11.25 million. Bet24 operated under its own brand for a limited period after the deal, before being absorbed into the Unibet brand.

Notable aspects of the acquisition:

• Bet24’s poker operations moved from Ongame to Unibet’s (Microgaming network).

June 2012

Amaya Group acquired Ongame Network for €25 million (£22 million) from Bwin.Party Digital Entertainment. Ongame Network operated as a leading B2B online poker network, with the deal providing access for Amaya to Ongame’s base of 20 million customers. The deal was seen as strengthening Amaya’s hand in Europe, but also placing them in a strong position for future access to gaming markets in the US.

Notable aspects of the acquisition:

• The seller, Bwin.Party Digital Entertainment, were themselves part of a merger in 2011 between Bwin and Party Gaming.
• Ongame would be sold by Amaya two years later, to NYX Gaming.

January 2013

Ladbrokes acquired Irish betting exchange firm Betdaq for €30 million (£26 million). At the time of the deal, Betdaq had a 7% share in the UK and Ireland’s online betting market. The deal effectively split Betdaq into two companies, with one (GBEA) operating a betting exchange, and the other (TBHG) providing the technology behind the exchange. Ladbrokes acquired just 10% of the latter.

Notable aspects of the acquisition:

• The deal gave Ladbrokes the option to sell back the 10% TBHG stake for €4 million (£3.6 million), or to buy the remaining 90%.

March 2013

William Hill completed the purchases of Sportingbet (Australia) and Centrebet for £460 million. It was the first move for William Hill into the Australian market. William Hill quickly revealed plans to phase out the Sportingbet and Centrebet brands in order to operate under the William Hill brand.

Notable aspects of the acquisition:

• Sportingbet was the leading corporate bookmaker in Australia at the time of the takeover.
• The deal also gave William Hill a call option over Sportingbet’s Spanish arm.

March 2013

GVC Holdings acquired Sportingbet for £560 million. The deal, which excluded the Australian branch of Sportingbet (see above), allowed GVC to take over the online casino and sports betting operations, as well as poker and gaming.

Notable aspects of the acquisition:

• Unlike with the Sportingbet Australia deal with William Hill, GVC still operates Sportingbet under the original branding.

April 2013

Betfair bought struggling online bookmaker brand Blue Square from Rank for £5 million. Betfair confirmed they would no longer use the Blue Square brand, but instead used the deal to gain access to the strong base of 120,000 Blue Square customers.

Notable aspects of the acquisition:

• At the time Betfair was still most recognised for its online betting exchange product. This acquisition was part of a concerted effort to grow its traditional online sports betting presence.

August 2013

Australian bookmaker chain Tom Waterhouse is acquired by William Hill for $AUS 34 million (£18 million approx.). It broadened William Hill’s presence in Australia, which already included Centrebet and Sportingbet.

Notable aspects of the acquisition:

• It was the third sale of a betting company to William Hill in 2013.

September 2013

Ladbrokes acquired Australian sports betting firm Gaming Investments Pty Ltd (GIPL) for approximately £13 million. The deal boosted Ladbrokes’ presence in Australia and coincided with the launch of the Ladbrokes.com.au site.

Notable aspects of the acquisition:

• GIPL’s brands included bookmaker.com.au and Panda Gaming.

February 2014

Swedish firm Betsson moved to gain a foothold in the newly regulated Dutch eGaming market by acquiring Class One Holding, operator of Kroon and Oranje online casinos, for €130 million (£115 million). The deal saw Betsson gain access to over 300 domains and a number of casino games.

• Class One Holding, which also had a presence in Belgium, gave Betsson licence to operate there as part of the deal.

April 2014

In another move to strengthen their presence in Australia, Ladbrokes bought online bookmaker Betstar for £12.4 million. The Betstar brand would continue to be used, with Ladbrokes acquiring around 40,000 online customers and a brand that had a turnover of around $AUS 300 million (£160 million).

Notable aspects of the acquisition:

• It was Ladbrokes’s second purchase of an Australian bookmaker in less than a year, with a similarly sized deal (£13 million) for GIPL (bookmaker.com.au) made in September 2013.

February 2014

GTECH bought mobile gaming specialists Probability PLC for £17.5 million. The deal gave GTECH access to Probability’s library of 30 mobile casino games, compatible with over 3,500 devices. The deal was seen as a strategic move to make itself ready for Gaming 2.0 – the next stage of gaming development characterised by mobile play.

Notable aspects of the acquisition:

• Probability had prepared several products deemed to be ‘US ready’, i.e. could be launched in the United States as soon as regulations permitted.

June 2014

Amaya acquired Rational Group (PokerStars, Full Tilt Poker) for $4.9 billion. The acquisition created quite a stir at the time for a number of reasons: Given Amaya’s relatively small size, the majority of finance was provided by GSO Capital Partners, Barclays, Deutsche Bank and Macquarie Capital; It was seen as a possible gateway back to the US for PokerStars, where the company had run into trouble with the authorities after a crackdown on online poker.

Notable aspects of the acquisition:

• The deal meant Amaya Group would become the largest publicly traded eGaming company in the world.
• The acquisition ended PokerStars’ creator Isai Scheinberg’s association with the brand. Scheinberg was one of the biggest beneficiaries of the online poker boom at the turn of the millennium.

July 2014

XL Media, a Jersey-based online gaming marketer, acquired Swedish affiliate Casinoportalen for $2.3 million (£1.62 million). The move gave XL Media access to Casinoportalen’s host of eGaming review sites, which points players towards casino and poker operators.

Notable aspects of the acquisition:

• The deal was seen as part of XL Media’s strategy to acquire website and domain names, including in the US.
  A month later, XL acquired a range of UK online sports betting and casino affiliates (company unnamed) for £5 million.

December 2014

Sky agreed to sell a controlling stake in its Sky Bet division to private equity firm CVC Capital Partners for an estimated £800 million. Sky kept a stake of 20% in the company, which was secured by an £80 million reinvestment.

Notable aspects of the deal:

• Sky successfully used its satellite television arm to drive the marketing of Sky Bet’s online sports betting, casino and poker. This continues today despite Sky losing its controlling stake in the firm.

February 2015

YoYo Games, developer of GameMaker: Studio (GMS), was bought by Playtech for $16.4 million (£11.77 million). The deal allowed Playtech to add GMS to its growing list of developer tools. There was also speculation that this would boost Playtech towards more mobile gaming.

Notable aspects of the acquisition:

• GMS had 750,000 registered users at the time of the acquisition.

April 2015

GTECH completed the acquisition of Interactive Gaming Software for $6.4 billion (£4.5 billion). The move, effectively a merger between the two companies, was one of the biggest to date in the gambling industry. Based in Nevada, Interactive Gaming Software developed some of the world’s most popular slot games, including Wheel of Fortune.

Notable aspects of the merger:

• The new combined company was rebranded IGT, with former GTECH CEO Marco Sala taking the helm of the new company.

April 2015

Amaya Group sold its Chartwell and Cryptologic software divisions to NYX Gaming for $119 million (£85 million). The deal saw NYX boost its games library by an extra 300 titles, giving them around 640 in their portfolio. In addition, the terms of the agreement also meant that NYX would provide gaming content for Amaya’s PokerStars and Full Tilt Poker sites.

• Amaya had paid less than half the amount mentioned above to acquire Chartwell ($23 million) and Cryptologic ($35.8 million) in 2011 and 2012 respectively.

July 2015

Swedish betting company Unibet bought Stan James’ online betting operations for £19 million. While a big name on the UK high street, Stan James’ online presence was relatively small, recording earnings of just £1.4 million in 2014. Unibet reasoned they could grow the Stan James brand online by operating better marketing and capitalising on the growth of mobile betting and the popularity of live in-play betting.

Notable aspects of the acquisition:

• The deal did not include any of Stan James’ 90 high street betting shops.
• Unibet (now operating under the name Kindred Group) announced in February 2018 that it would be phasing out the Stan James brand online.

September 2015

Unibet purchased gaming operator iGame Holding for €59 million (£52 million). iGame Holding operated casino and sports betting brands recognisable to customers in Scandinavia and Eastern Europe, including Casinohuone, Bohemia Casino and 24hBet Sports.

Notable aspects of the acquisition:

• Unibet’s shares fell by 0.58% when news of the deal was confirmed.

February 2016

GVC Holdings acquired bwin.party in a £1.1 billion deal. The deal was a ‘reverse takeover’, meaning that bwin.party kept two-thirds of the shares in the company despite being the entity purchased in the deal. GVC’s gaming would move to Bwin’s platform under the terms of the deal.

Notable aspects of the acquisition:

• 888 Holdings were also chasing bwin.party in a fiercely contested deal. The deal saw the bwin.party board split, with a secret ballot of shareholders required to put GVC in place.

March 2016

Two of the biggest names in UK betting, Paddy Power and Betfair, agreed to merge in a £6 billion deal. The tie-up, Paddy Power Betfair, was achieved by Irish bookmaker Paddy Power buying Betfair, with Paddy holding a 52% stake and the rest by Betfair investors. The merger created one of the world’s biggest betting firms, with both brands providing online casino, bingo and poker operations.

Notable aspects of the merger:

• The deal created a lot of speculation that the newly created company would list on the London Stock Exchange (LSE). It did, and later became a FTSE 100 company.

April 2016

Catena Media purchased giant AskGamblers.com, a successful portal for online casino reviews and rankings, for €15 million.

Notable aspects of the deal:

• The acquisition of AskGamblers, a well-known and highly acclaimed brand, is the largest in the history of Catena. The deal is said to bolster the company with a strong, skilled team.

May 2016

NYX Group completed the acquisition of OpenBet for £270 million. This enabled NYX to expand its access to over 200 gaming operators worldwide, adding 2000 mobile and desktop casino games to its existing portfolio of 700.

Notable aspects of the acquisition:

• William Hill had invested £80 million into NYX to support the OpenBet acquisition.

July 2016

Playtech bought one of its rivals, Best Gaming Technology (BGT), for €138 million (£121 million). The move was part of a concerted effort by Playtech to expand the products and technology it provides for gaming and betting operators like William Hill and Ladbrokes. The deal saw Playtech gain 90% of BGT, with the company’s founder Armin Saegder remaining with the firm for three years minimum.

Notable aspects of the acquisition:

• BGT is most noted for creating the technology behind self-service betting terminals, a key aspect in the drive of traditional betting firms to create omni-channels to compete with online rivals.

August 2016

William Hill bought Grand Parade, a maker of apps, websites and platforms for eGaming and betting, in a £13.5 million deal. William Hill cited the deal as integral for increasing development of new products.

Notable aspects of the deal:

• The acquisition came just a few weeks after William Hill rebuffed a joint takeover bid from 888 Holdings and Rank (see below).

November 2016

Gala Coral and Ladbrokes agreed to merge in a deal that valued the new company at £2.3 billion. The deal was more than a year in the making, with Ladbrokes agreeing the terms back in July 2015.

Notable aspects of the merger:

• The deal was only given the green light by the CMA (UK Competition and Markets Authority) after Coral and Ladbrokes agreed to sell 350-400 betting shops to Stan James and Betfred.
• Ladbrokes Coral Group is listed on the FTSE 250 Index on the LSE.

February 2017

Swedish online and mobile casino operator LeoVegas bought Winga for €6.1 million (£5.38 million). Winga, based in Milan, was particularly successful with its live casino operations, taking over half its revenue from it in 2016.

Notable aspects of the acquisition:

• At the time of the acquisition, LeoVegas, buoyed by record revenue, indicated it was ready to make more acquisitions during the year (see below).

February 2017

Catena Media acquires Swedish Slotsia.com, the casino affiliate, for €3.6 million.

Notable aspects of the acquisition:

• The acquisition will strengthen Catena’s position as a market leader in Sweden as well as one of the fastest-growing affiliate companies in Europe.

March 2017

Betsson made a move to access the Spanish online gaming market by acquiring Premier Casino for €3 million. The deal would give Betsson access to 260,000 Premier Casino customers based in Spain, with Betsson citing Spain as one of the fastest growing markets in online casino.

Notable aspects of the acquisition:

• Betsson signalled that it was willing to bring in more casino products under the Premier Casino banner as it looked to expand its multi-brand strategy.

March 2017

In Betsson’s second acquisition of the month, the Swedish firm acquired NetPlay TV for £26 million. NetPlay’s assets included Jackpot247, SuperCasino and Vernons.

Notable aspects of the acquisition:

• The deal was seen as furthering Betsson’s ambitions to consolidate in the UK market.

April 2017

Gaming Innovation Group (GIG) along with subsidiary Innovation Labs completes purchase of Casinotopsonline.com for €11.5 million.

Notable aspects of the acquisition:

• This continues GIG’s major purchasing of casino-based companies in 2017. This followed a similar acquisition in February. Though not identified, the purchased company’s assets included a strong stake in domains and SEO rankings, totalling €3.5 million.

May 2017

In a continuation of GIG’s move to acquire, the group purchased an affiliate network for €5.7 million.

Notable aspects of the acquisition:

• The deal gave GIG a large stake in affiliate contracts.

May 2017

Catena Media purchased assets in sports betting affiliate Online Media UK for £11.65 million. This included a range of domain names, including Bets.co.uk, Bonuses.co.uk and iGamble.co.uk.

• The deal gave Catena a strong position in the UK for affiliate marketing.

June 2017

Kindred Group (formerly Unibet) purchased 97% of UK online casino operator 32Red. The offer valued 32Red at £175.6 million, which was accepted after the UK Gambling Commission gave approval on the deal.

Notable aspects of the acquisition:

• Kindred Group added 32Red to its already long list of online casino and sports betting brands, including Maria Casino, Unibet and iGame.

July 2017

Catena Media acquired sports-affiliate Bettingpro.com for £13.9 million. The deal gave Catena a wide range of betting/casino industry-related sites, including footballtips.com, livetennis.com and freespins.com.

Notable aspects of the acquisition:

• Bettingpro’s team of 25-30 freelance journalists were integrated into the Catena Media team after the deal.

August and September 2017

GIG acquired Scandinavian affiliate STK Marketing Ltd for just over €26 million in August, with another large deal the following month with the purchase of Danish Rebel Penguin Aps for €12.6 million.

Notable aspects of the acquisition:

• The Rebel Penguin deal puts GIG smack into the paid media space market with the tech-driven Danish affiliate group and reinforces its place as leader in the Scandinavian affiliate market.

September 2017

NYX was acquired by Scientific Games for $631 million (£450 million) in a merger agreement. The deal would create a global player in offering eGaming and sports betting platforms. Once again, the deal was seen as one that was, partly, in readiness for future access to the US gaming market should regulation change.

Notable aspects of the acquisition:

• William Hill lobbied unsuccessfully to block the merger, raising concerns about the use of the OpenBet platform which they had invested in a year earlier.

November 2017

LeoVegas acquired Web Investments Limited, which is the holding company behind Royal Panda online casinos, for an initial €60 million, rising to a maximum of €120 million. The move was seen as a step by LeoVegas to strengthen its position in the UK online casino market. The UK market provided 50% of Royal Panda’s revenue in 2016.

Notable aspects of the acquisition:

• Royal Panda was primarily known as an online casino, but it did launch a sportsbook in 2017.

December 2017

Catena Media purchased the affiliate-related assets in one of the top European affiliate marketers Baybets Ltd for €26.5 million upfront with a performance-based maximum earn-out of €63.5 million.

Notable aspects of the acquisition:

• The deal is set to give Catena a stronger sports betting offering in the ever-important German, Austrian, and Swiss market.

List of 2018 M&As completed within the eGaming Industry

• LeoVegas purchases Intellectual Property and Software for £65million.
• William Hill Australia acquires by The Stars Group for £167 million.
• The Stars Group buys majority stake in Crown Bet.
• GVC Holdings buys majority stake in Crystal Bet.
• Scientific Games acquires online bingo content provider EsysnetG.
• Gambling.com acquires mobile performance marketing network Happen Chance for £3 million.
• Gambling.com acquires Bookies.com and its related assets for £2 million.

The most eye-catching pending merger is Ladbrokes Coral and GVC Holdings. A deal was struck in late 2017 for GVC to buy Ladbrokes Coral for up to £4 billion. Intriguingly, the final price on the deal will be decided after the UK Government publishes its findings on FOBTs (Fixed Odd Betting Terminals). If the Government restricts the wagering limits of the land-based betting machines, GVC will pay a lower price (potentially £3.1 billion) for Ladbrokes Coral. Ladbrokes Coral shares surged on the news of the takeover.

Rumoured Mergers and Acquisitions in eGaming for 2018:

• Paddy Power Betfair and Crown Bet potential merger.
• Penn National Gaming Inc could acquire Pinnacle Entertainment.
• William Hill could revive merger talks with the Stars Group (see below).

Pending 2018 M&As

• XL Media is expected to finalise deal for Good Game, whose operations include Netticasinot.com, for £7 million.

Failed Mergers and Acquisitions:

William Hill has been the most notable UK gaming brand not to have been acquired by or merged with a rival. The reason this is significant is that the majority of its UK rivals – Paddy Power Betfair, Ladbrokes Coral – did merge, which ramped up speculation that William Hill would have to follow suit. In 2016, William Hill entered talks with The Stars Group over a possible merger. However, the deal collapsed in October of the same year. William Hill was also the subject of a takeover bid by Rank and 888 in August 2016, but once again the deal collapsed, allegedly costing the job of CEO James Henderson.

Other notable failed M&As in eGaming:

• Rank and 888 Holdings fail to merge in 2016 after collapse of William Hill deal (see above).
• Playtech called off a deal to buy spread betting firm plus500 in 2015. The deal was ended after concerns were raised by the UK’s Financial Conduct Authority (FCA), with Playtech reluctant to meet the demands set out by the FCA.
• CVC Capital Partners failed to takeover Betfair in 2013, after a disagreement over the price of the bid. At the time, Betfair claimed the bid did not represent “adequate value”.

Mergers and, more notably, acquisitions have become a common occurance within the eGaming industry, with dozens of deals completed in the last five years. Many of the biggest names, such as Ladbrokes, Bwin, Betfair and PokerStars, have been involved in takeovers, but there are companies big and small still thriving on their own or awaiting the right offer. While 2012-2017 was rife with M&As, the future looks set to continue the trend, with the big casino brands as well as smaller affiliates looking for the perfect deal.