Scientific Games is freeing up investment capital for content and digital growth after it announced the sale of its OpenBet sports betting arm to Endeavor for $1.2bn in cash and stocks. [Image: Shutterstock.com]
SG to offload sports betting arm
Scientific Games Corporation (SG) has announced the sale of its London, UK-based OpenBet sports wagering business to Endeavor Group Holdings for $1.2bn in cash and stocks.
Business-to-business sports betting company OpenBet took to Twitter on September 27 to announce the deal, stating that Endeavor was “the global partner of choice”:
The Las Vegas-based SG expects the transaction to close next spring, following regulatory approval. The deal will swell the company’s coffers by $1bn in cash and land the gaming manufacturer $200m in Endeavor’s Class A common stocks.
OpenBet bills itself as a specialist in processing wagers, risk management, and player accounts. Based in Chiswick, London, the firm has 24 sportsbooks in 12 US states and over 75 global customers across Asia-Pacific, Europe, and North America.
According to SG president and CEO Barry Cottle, the OpenBet sale is a strategic move to optimize its portfolio and de-lever its balance sheet in order to boost the firm’s financial flexibility.
deal will position SG “to invest […] in key growth areas, particularly in content and digital”
SG’s vision is to establish itself as the leading global cross-platform game company. The OpenBet deal will position SG “to invest both organically and inorganically in key growth areas, particularly in content and digital markets,” Cottle elaborated.
Upside for Endeavor
According to Variety, Endeavor’s shares jumped “14% in after-hours trading on the news”. SG’s stock was up by over 4%.
Endeavor CEO Ariel Emanuel said in a news release that the addition of OpenBet will complement the firm’s existing IMG ARENA sports betting business. IMG Arena works with over 470 sportsbook brands worldwide, with rights-holding clients including the PGA Tour, Ryder Cup, Wimbledon, Major League Soccer, and the Football Association.
Endeavor is a Beverly Hills-headquartered global entertainment and talent-agency conglomerate. It owns Ultimate Fighting Championship (UFC); global sports, events, and talent management firm International Management Group; and talent agency William Morris Endeavor.
“The combination … 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,” Emanuel added in a statement.
SG’s digital-first about-turn
SG is putting its money where its mouth is, or rather earmarking capital from divestments for “enhanced growth”, after it announced its lottery and sports betting divestment plans in July.
Having completed a strategic review, SG took to Twitter on July 29 to share news of the “decisive steps” it was taking to become a “content-led growth company with a focus on digital markets”:
In a statement, Jordan Levin, the chief executive of SG’s digital business, described Endeavor as an ideal partner. He concluded that in coming together, both companies can capitalize on unfolding trends to offer more innovative and customized solutions to customers “as we define the future of sports betting entertainment.”