Endeavor Group Holdings has entered into a definitive agreement to acquire the OpenBet sports betting division from Scientific Games, sending indications to competitors that it plans to raise the stakes in the already intense turf wars for global sports wagering data.
Endeavor announced Monday that it will purchase OpenBet for $1.2 billion in a cash-and-stock deal — $1 billion in cash and $200 million of Endeavor’s Class A common stock. Endeavor, which already owns sports betting and content hub IMG ARENA, said Monday that it will create a new division aimed at delivering “end-to-end solutions” for sportsbooks, leagues, and federations worldwide.
The division, which will combine IMG ARENA and OpenBet, is projected to generate 2022 pro-forma revenue of $340 million, Endeavor said in a presentation detailing the transaction. While a number of top sports betting data providers already partner with major sportsbooks to offer live streaming of global sports events, they are mostly limited to niche sports outside of the U.S. This acquisition raises the possibility that Endeavor could introduce onscreen betting for sports with mainstream appeal, led by grand slams in tennis and major championships in golf.
“OpenBet marks a strategic addition to our sports betting portfolio as we look to round out our technology and product offering for sportsbook operators and sports brands worldwide,” Endeavor CEO Ari Emanuel said in a statement. “The combination of OpenBet and our IMG ARENA business will enable us to expand our footprint across the entire sports betting value chain and further capitalize on the tremendous upside we see coming from this fast-growing global industry.”
Operational integration with IMG ARENA
The 2022 revenue projections do not take into account run-rate synergies between OpenBet and IMG ARENA over the first year of the deal. At market maturity, however, Endeavor projects estimated incremental run-rate synergies of $100 million a year, as OpenBet’s sports betting technology and content complement IMG ARENA’s betting data and video feeds, according to Endeavor. OpenBet also offers player account and wallet solutions to its sportsbook clients and pricing feeds through DonBest, a sports wagering provider acquired by Scientific Games in 2018.
Of the projected $340 million in pro-forma revenue next year, OpenBet is expected to contribute $150 million, or about 44%, of the division’s revenue, according to Endeavor’s estimates. While Scientific Games’ sports betting segment recorded revenue of about $100 million in 2020, according to Endeavor, the figure is less than Scientific Games’ historical disclosures for 2020 sports and platform revenue of $127 million, Truist Securities analyst Barry Jonas wrote in a research note.
$12 billion Endeavor the 2nd largest investor in Leap (25%) after #SeedInnov 44% ownership have begun their gambling acquisition spree.
Acquiring sports betting company Openbet for $1.2 billion https://t.co/CZ79u6qsqH
— DU (@greenhamneggs) September 28, 2021
Through a comprehensive suite of offerings, OpenBet provides trading, pricing, and risk management tools to the largest sportsbooks in the industry, led by DraftKings, FanDuel, and BetMGM, as well as Caesars Sportsbook and WynnBET. As legal sports betting proliferates nationwide, customers have shown an appetite for placing single-game parlays, which allows a bettor to wager on multiple props within one contest, sometimes with a sportsbook bonus included. OpenBet’s technology enables a customer to design their own parlay within one match while incorporating creative micro bets, such as total corner kicks in soccer or total punts in football.
On Monday, FanDuel announced that a four-leg, same-game parlay on Sunday night’s matchup between the Green Bay Packers and the San Francisco 49ers cashed at odds of +824. Following first-half touchdowns by Davante Adams and Aaron Jones, the bet cashed in the fourth quarter when the teams combined for 27 points over the period. More than 5,000 FanDuel customers played the bet, according to a company spokesman, representing the site’s second-most popular combination of the night.
IMG ARENA, meanwhile, partners with approximately 470 global sportsbooks, offering official live streaming video and data feeds for more than 45,000 sports events annually. The list contains a bevy of prominent sports leagues and events, including the PGA Tour, Wimbledon, ATP, USTA, and Ryder Cup. Moreover, three Endeavor-owned sports businesses — the UFC, PBR Rodeo, and Euroleague basketball — contributed about 27% of the company’s revenues in 2020.
“Now, when you overlay OpenBet, you will have a one-of-a-kind global and scaled operation,” Emanuel said Monday in a webinar discussing the acquisition. In 2020 alone, OpenBet processed approximately three billion wagers, according to Endeavor.
Emanuel, the brother of former Chicago mayor Rahm Emanuel, is the inspiration for colorful Hollywood agent Ari Gold on the HBO comedy Entourage, which ran for eight seasons through 2011. Emanuel, who has represented “A-List” Hollywood celebrities such as Oprah Winfrey, Mark Wahlberg, and Dwayne “The Rock,” Johnson, controlled a stake of about $840 million in Endeavor with business partner Patrick Whitesell when the company went public in April.
Separately, FanDuel announced Monday that a bettor who placed an $8, 12-leg parlay on a dozen singles matches of the Ryder Cup received a payout of $966,290 when he correctly picked all 12 matches. The wager underscores the popularity of single-game parlays, which offer astronomical odds on the combination bets.
Narrowing the gap
While IMG ARENA still trails Genius Sports and Sportradar in the pecking order of major sports betting data providers, Monday’s announcement will likely help close the gap. In April, Genius gained exclusive rights for the global distribution of the NFL’s sports betting data feed in a multi-year deal worth as much as $1 billion. Sportradar maintains partnerships with the NBA, NHL, and MLB, among other top sports leagues.
Through a collaboration with Sportradar, DraftKings offers live streaming of foreign leagues like the Korean Baseball Organization and the German Bundesliga. When PointsBet signed an extended partnership with Genius last month, it gained access to the live stream of off-peak events headlined by volleyball and eSports. Viewership for those events pale in comparison to the UFC and top events in tennis and golf aligned with IMG Arena.
Endeavor traded around $28 a share on Tuesday morning, up 3% on the session. Endeavor jumped more than 7% in Monday’s after-hour session to $29.48 before retreating some on Monday night. Scientific Games, which is looking to reduce its debt load through various divestitures, surged as much as 12% in Monday’s extended session to an all-time high of $93 a share. Scientific Games traded around $84 on Tuesday morning.
Endeavor’s acquisition of OpenBet is expected to close in the second quarter of 2022, the company said in the statement.