48 hours of SBC Summit North America, and FansUnite is in deal-making mode
The first two days of the latest industry gathering included a state-of-Ontario panel, and what's happening in the world of mergers and acquisitions. Also, another Vancouver company is doing deals.
May 11, 2023
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In this issue:
The state of the industry in Ontari-ari-ari-o
Gaming News Canada Show crosses the border
A summary of the SBC Summit (so far)
The bad bets of NCAA student-athletes
FansUnite CEO in active M&A mode
The state of the game(ing) in Ontari-ari-ari-o
It seems a tad strange that it takes a road trip to Secaucus to see in the flesh some of Ontario’s leaders in the sports betting and igaming industry, but hey, we’ll take it.
So, we found ourselves in the bowels of the Meadowlands Exposition Centre mid-afternoon yesterday for a state-of-Ontario panel discussion at the SBC Summit North America. Canadian Gaming Association head honcho Paul Burns held the moderator’s mic, joined by Marina Bogard (Betsson Group), OLG’s Andrew Darley (pinch-hitting, as Burns put it, for Dave Pridmore), Alcohol and Gaming Commission of Ontario COO David Phillips, Bruce Caughill of Rush Street Interactive, and industry beat writer Geoff Zochodne of Covers.
While it was unfortunate that there wasn’t - as they say in hockey parlance - time and space to discuss the AGCO’s proposed changes to advertising standards involving athletes and other celebrities, the panel delivered takeaways from the first 13 months of the province’s highly-competitive, regulated industry.
The quote that really caught the attention of the audience came from Darley, who said that Ontario “is the Number One market in the world” if you include OLG’s revenue numbers with the numbers reported by iGaming Ontario through its 45 operators.
Also from the panel:
Phillips on the creation of Ontario’s marketplace: “The AGCO believes good regulatory policy is always made better if you engage in real, two-way communication. We did five rounds of consultation, and we had the benefit of (taking the) experiences of jurisdictions in other parts of the world. We also put in place a focused strategy in dealing with unregulated markets. We have 45 operators and twice as many suppliers. The level of interdependency is absolutely massive.”
Bogard on the relationship between the AGCO and the operators: “We’ve been an operator in quite some time (as a previous grey-market business) and working with AGCO and iGO has been smooth sailing.
Darley on the open market forcing OLG to step up its game(ing): “I don’t think we had put our best foot forward in how to compete with Tier 1 (grey-market) operators, and it forced us to say ‘we’re not going to win if we sit on our hands’. We restructured how we do everything and now we have a new platform, a new app, and a new online sportsbook.”
Caughill on the regulations preventing operators from using bonuses and other inducements to sign up customers: “It’s forced us all to market our product and offering. It’s a level playing field. It’s very important to continue to allow operators to market on product. (With no bonuses), we’re marketing in a different way.”
Zochodne on one year into the market: “There was that initial shock, but now we’re getting to a period when the market starting to mature, and it’s becoming about providing good information and education to the player. How you bet on sports responsibly. What’s a good bet, and what’s a bad bet.”
Finally, on consolidation within the market:
Bogard: “There’ll be consolidation, and it will be interesting to see who’s around a year from now. It’s really hard to be profitable if you’re only a sportsbook.”
Darley: “Ontario has one of the lowest barriers to entry, and it will reach a point where some operators will realize how difficult it is to compete.”
Phillips: “The government in Ontario made a choice to have a truly competitive market. There will be winners and losers.”
Live from Secaucus, it’s the Gaming News Canada Show!
For the first time, the Gaming News Canada Show presented by Osler, Hoskin & Harcourt LLP is going live from another jurisdiction.
We will be live on LinkedIn Audio this afternoon from the Meadowlands Exposition Center on the final day of the SBC Summit North America. Please note that we have an earlier starting time than usual, as we’ll be on the internets starting at 1 p.m. ET. Gambling industry guru Benjie Cherniak, GeoComply executive John Pappas, Tallysight co-founder and CEO Matt Peterson and CTO Masheed Ahadi, and Brock University sports management professor Michael Naraine are scheduled to drop by our TBD location on the Summit Floor.
And, in case you missed last week’s GNCS with Paul Burns, Amanda Brewer, Kris Abbott, Jim Lawson and Mark Silver:
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A summary of the SBC Summit (so far)
We consumed a lot from Day 2 of the SBC Summit North America yesterday, and we don’t mean the cappuccinos, cheese bacon butties, cannolis, doughnuts and ice cream treats available on the Summit floor.
Some slicing and dicing of the panel discussions, on-floor conversations and coverage of Day 2 from other corners:
As we’ve mentioned here on more than one occasion, the Doug Ford government’s decision to regulate both sports betting and online gaming has not only been embraced by the 45 (and counting) legal operators in the province, but avoided the messy situation being experienced in many U.S. states which only allow for legal sports wagering. As was the case with the iGaming Next conference in New York back in March, igaming was a popular topic yesterday. And, in case you don’t believe us:
Zochodne, the Covers chronicler who also more than respectably represented the fourth estate on the state-of-Ontario panel yesterday, had more to tweet on the topic:
A New York senator figures legal igaming will arrive in the Empire State in 2024.
Matt King, the president and CEO of Fanatics Betting & Gaming, did a fireside chat (minus the fire) with Sportico’s Eben-Novy Williams and also did the Q and A thing with SBC Americas editor Jessica Welman.
Mike Seely of Sports Handle wrote off a pair of Monday panels focused on responsible gambling and problem gambling among athletes.
The American Gaming Association released the findings from its latest research, revealing that 77 per cent of Amaricans now bet online with regulated sportsbooks, and 85 per cent agree with the U.S. Supreme Court’s decision in 2018 to overturn the Professional and Amateur Sports Protection Act.
NCAA student-athletes making bad bets
Iowa, or more precisely, Dyersville, is the home of baseball’s Field of Dreams. This week, the Hawkeye State, or more precisely, the University of Iowa and Iowa State, finds themselves at the centre of a sports wagering quagmire.
Some 41 student-athletes between the two institutions are alleged to have bet on sports. From the University of Iowa’s athletics department earlier this week:
Also this week, PointsBet terminated its second partnership with a U.S. college, this time the University of Maryland. Last month, Caesars and Michigan State University ended its partnership ties.
There have been suggestions that the cases in Iowa, along with the recent firing of University of Alabama baseball coach Brad Bohannon amidst allegations of suspicious betting activity, are the start of a larger wave of wagering activity on campuses across the land of the free in this new world of legal sports betting. In fact, betting scandals involving student-athletes go back to 1950, when bets went through your friendly neighbourhood corner bookmaker, or through some rather unsavoury types.
“This isn’t brand new, or because sports betting is now legal,” Canadian Gaming Association head honcho Paul Burns said yesterday. “Now, it’s easy to detect and (the Iowa situation) should be a lesson to all NCAA athletes. You will get found out.”
That’s because with regulation comes more oversight and accountability. There are integrity units/associations/services around the world today. Savvy technology companies are developing programs to help the gambling industry identify bettors who should be limiting the over-under on how many slices of pizza they wolf down post-game. When NFL players were suspended last month for betting on sports, the players association warned the membership that sportsbooks were tracking their betting activities.
“It’s about educating athletes and ensuring there are proper protections,” said Burns. “That’s where the AGCO acted against the UFC (and instructed legal operators in Ontario to remove the mixed martial arts organization events from its sportsbook offering temporarily earlier this year). “They need to fix their integrity program, and they did.
It’s a . . . er. . . safe bet that the NCAA investigations will be part of the conversation at the end of the month when the Canadian Centre for Ethics in Sport hosts in Toronto its Symposium on Match Manipulation and Gambling in Sport.
FansUnite Entertainment in sell, sell mode
Scott Burton was speaking Monday afternoon via the old Google Meet about FansUnite Entertainment selling its McBookie business last week and Monday’s announcement involving a matter of M&A between fellow Vancouver companies GeoComply and OneComply.
“People are looking to complete some deals, and the M&A activity is starting to warm up,” said Burton.
Turns out the FansUnite CEO wasn’t just whistling Dixie.
As we were about to board our flight to New Jersey on Tuesday afternoon, news landed in our inbox of a done deal between FansUnite and Betr - the Joey Levy-Jake Paul tag team sports betting business - around FansUnite’s Chameleon platform. From the news release:
FansUnite currently provides the Player Account Management (“PAM”) system for Betr’s operations, which made Chameleon an excellent fit with Betr’s long-term strategy of owning its technology platform. Betr is the micro-betting specialist sportsbook co-founded by Jake Paul, currently operating in Ohio with plans to expand throughout the U.S.
In addition, Betr has engaged 28 employees or contractors from the Company to continue work on the Platform and the parties have entered into a transition services agreement with respect to certain transition services to be provided on a post close basis.
“This is a transformational transaction for FansUnite and we are excited to move forward as a business that is a dominant player in its sector with the ability to execute on a profitable growth strategy,” said Scott Burton, CEO of FansUnite. “With the completion of this sale, we will reduce annual costs, ensuring we can execute on our strategy to generate positive cash flow this year.”
From Betr co-founder Joey Levy: “This is a transformational transaction for Betr that enables Betr Gaming to fully control our ability to execute against our core strategy, while also capturing a material amount of gross margin for our business model.”
Burton, who was multitasking during our Monday p.m. call (and now we know why), echoed the call from other companies in the gambling industry so far in 2023 that there’s a push for profitability. The FUE grand poobah says it’s about a market that’s now five years into the post-PASPA era in the U.S., and also the economy, stupid (OK, that was your friendly neighbourhood correspondent injecting his inner James Carville with the daft reference).
“If you’re planning over the next year to raise more capital, it’ll be hard if you’re not profitable,” Burton said. “In 2021 (when single-event sports betting became legal in Canada), people were investing in growth and the future. Now, it’s about cash flow and profit, so you’re seeing companies simplify and streamline.
“Our focus is on getting this business cash-flow positive.”
For FansUnite, the focus is on its technology business and its Betting Hero affiliate marketing business, which became part of the company’s portfolio through its November 2021 purchase of American Affiliate. Betting Hero now operates in 15 states across the U.S. of A.and has added to the services it provides subscription-based Hero Research and the Hero Hotline to customers seeking support with activating their online sportsbook accounts.
Burton also told us that the Canadian Gaming Association is working with the Alcohol and Gaming Commission to create a model for affiliates to operate in the province. The inability for licensed sportsbook and igaming operators to offer sign-up bonuses and inducements, combined with those operators being responsible for the oversight of affiliates, has discouraged affiliate activity in Ontario.
On a panel addressing profitability in 2023 at the SBC Summit yesterday, Rick Arpin of KPMG Las Vegas confirmed that the M&A tailwinds are a blowin’.
“There is going to be lots of M and A activity, but the deals will be more strategic. . . what makes the most sense rather than grabbing the first company that’s available,” Arpin said.
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