Light & Wonder Completes $800m Sale of OpenBet to Endeavor

On Friday, October 30, Endeavor Group Holdings, a US-based sports media company, announced it had concluded the acquisition of OpenBet from Light & Wonder Inc (formerly Scientific Games Corporation).

OpenBet specializes in sports betting technology, player accounts and wallet solutions, counter offering like BetBuilder, and processing of bets. There are about 1,000 team members at OpenBet globally, focusing on regulated international gaming markets and licensed customers. The company’s key clientele includes Ladbrokes, William Hill, FanDuel, DraftKings, and SkyBet.

After the completion of the transaction, Ariel Emmanuel, the CEO of Endeavor, released an official stamen saying:

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“The addition of OpenBet to our sports betting portfolio will enable us to further capitalize on the massive tailwinds in the fast-evolving sports betting ecosystem and lead the way in defining the future of sports betting entertainment. In combination with our IMG ARENA sports data and content business, we’ll look to create and unlock meaningful value for our rights holders and sportsbook customers, helping deliver the most compelling offerings for sports fans globally.”

Following the announcement, Endeavor’s share price soared by 5.14% on the New York Stock Exchange by the end of the trading day on Friday. Meanwhile, the share price of Light & Wonder slid by 2.41% on the NASDAQ over the same period.

OpenBet is Now Under Endeavor’s Network

Endeavor’s acquisition of OpenBet was officially announced in September 2021. Now that the deal has been finalized, Endeavor can expand its territory through the sports betting industry. Initially, the deal was set at $1.2 billion; but the two parties settled at $800 million, which is 33% less than the first bid.

To complete the transaction, Endeavor will pay $750 million as cash, and the remaining $50 million will be paid as Endeavor class A common stocks. The sale proceeds from the Endeavor deal will help Light & Wonder achieve its projected net debt leverage ratio of between 2.5x and 3.5x.

Although the two parties did not explain the price drop, a lot has changed since the deal was first announced and when the acquisition was filed at the Security and Exchange Commission (SEC) in June. For instance, in the 9-month duration, the cost of data has increased significantly, and new consumers have lowered the expectation of some of the leading brands in the U.S. sports betting scene. In addition, OpenBet stocks had dropped by 45% during the SEC filing in June 2022 compared to September 2021.

What to Expect from Endeavor Going Forward

With the acquisition out of the way, that Endeavor will begin merging IMG Arena and OpenBet. Starting January 2023, the merging parties will form a fourth operating line for Endeavor Group Holdings, known as Sports Data & Technology. The estimated annual revenue from the fourth operating segment is $340 million.

IMG Arena works with 470 sportsbooks, federations, and leagues globally to transmit official FastPath data feeds and live-streaming videos from 45,000 sporting matches annually. In addition, IMG makes and develops a few of the second-screen sports content in addition to mobile and virtual sports-specific gambling products. The merged unit will place Endeavor on par with the leading backend sportsbooks brands Genius Sports and Sportradar.

Light & Wonder Inc Laser Focused on Casino Gaming

As part of the strategic plan announced by Light & Wonder in June 2021, the company put its lottery and sports business up for sale to focus on the casino space. The move allowed the company to center its efforts on becoming the biggest cross-platform international gaming company.

So, come April 2022, Light & Wonder sold its lottery business to Brookfield Business Partners for a whopping $5.6 billion, followed by the most recent OpenBet sale.

With the divestments complete, Matt Wilson, Light & Wonder’s interim Chief Executive, spoke of the company’s future, saying:

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“With our high mix of recurring and digital revenues, double-digit growth profile, $1.4 billion of 2025 targeted consolidated AEBITDA, and strong cash flow, we have created an opportunity to generate significant excess capital. Our enhanced financial flexibility accelerates our ability to return substantial capital to shareholders through our share repurchase program while also pursuing our key growth initiatives, enabling us to unlock tremendous shareholder value going forward.”

In November 2021, Light & Wonder acquired renowned live casino solutions provider Authentic Gaming, even though it has yet to open live dealer studios in the United States. Nonetheless, when it finally rolls out the live dealer vertical, the company will be ranked third after the industry’s top dogs, Evolution and Playtech. At the time of purchasing Authentic Gaming, Light & Wonder estimated that the live dealer games represented 30% of the online gambling market.

Later in May, the company bought Playzido, and even though the acquisition was considered small, it is expected to have a massive impact on its future business. Playzido is a game supplier and content creation platform for providing proprietary Remote Gaming Server (RGS) platforms for different clientele.

As we speak, Playzido is among the best in rapid custom game development for the online gambling industry. Thus, the acquisition of Playzido has created an avenue where other game operators and studios globally can partner with Light & Wonder to co-create and develop new and exclusive products.