Expect More Sports Betting Consolidation, Says Morgan Stanley
Speculation regarding sports wagering industry mergers and acquisitions activity, peculiarly on the operator side, remains intense and some analysts believe deal-making could perk up as 2023 progresses.
In a Mon mention to clients, Lewis Henry Morgan Francis Edgar Stanley analysts observed that over the past times sevener years, revenue for the world’s fin largest sportsbook operators to a greater extent than quadrupled with a prominent assist from acquisitions. They added that Flutter Entertainment (OTC: PDYPY) will brand to a greater extent revenue this year than the quint biggest operators did on a combined fundament in 2015.
This convert has been goaded partly past securities industry growth, but has come in from M&A, as operators seek to diversify their revenues and achieve weighing machine benefits inwards the human face of rising revenue enhancement and regulatory headwinds,” observed the analysts. “We await regulatory drivers for consolidation to endure.”
It’s possible, still likely, that the biggest sportsbook operators, such as Flutter and Entain Plc (OTC: GMVHY), testament grow via acquisitions. Flutter, the parent companionship of FanDuel, arrived at its stream composition via at to the lowest degree a dozen acquisitions over the past times decennium while Entain has been I of the to the highest degree acquisitive firms in the industry over the past tense several years.
“The M&A chance go down for the largest operators appears to be broadening as diversification, scale, technological capability, cash in flow generation, and equilibrize weather sheet content is progressively inward counterpoint to littler scale leaf competitors, “ added Sir Henry Morgan Stanley.
US Could Be Epicenter of Sports Betting Consolidation
Not surprisingly, the US could live a hub of sports betting industry consolidation activity. At the really least, this land testament follow a hotbed of related to rumors.
For example, PointsBet (OTC: PBTHF) of late confirmed it’s inwards forward-looking discussions to sell its US operations. Its Commonwealth of Australia branch has also been the content of takeover speculation. Benjamin Rush Street Interactive (NYSE: RSI), another littler domestic sportsbook company, has long been viewed as a potentiality target, too.
“The potentiality of the US securities industry has driven a significant initial phase of consolidation, focused on ownership/control of US entities, insourcing technology, and make an sharpness inwards client acquisition through media and database deals,” noted J. P. Morgan Stanley. “As the marketplace transitions into its next (profitability) stage, we expect some of these to endure with additional impetus from new/late entrants.”
With just iii operators, FanDuel, DraftKings, and BetMGM, controlling more than three-quarters of the US online sports wagering market, littler rivals may hold no quality but to merge with apiece other in a call to sett unitedly market place share.
Sports Betting Consolidation Negative for Data Providers
If thither are potentiality losers past right smart of more sports wagering manufacture mergers and acquisitions activity, it could be data providers such as Genius Sports (NYSE: GENI) and Sportradar (NASDAQ: SRAD), according to Thomas Hunt Morgan Stanley.
The analysts say that if the figure of gaming operators declines, the existing firms testament earn purchase inward negotiations with data providers.
That doesn’t connote the relevance of Genius advert Sportradar is vulnerable, but those firms could receive diminished pricing powerfulness if the keep down of possible clients declines.
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