DraftKings to Buy SBTech? Multiple Sources Say Deal is Close

Posted on: June 28, 2019, 06:50h. 

Last updated on: June 28, 2019, 06:50h.

DraftKings is rumored to be very close to acquiring sports betting solutions giant SBTech in a deal that would provide the daily fantasy sports company with its own in-house betting software and potentially vastly expand the scale of its sports book operations.

News of a possible acquisition of SBTech by DraftKings caused Kambi’s share to plunge on the Stockholm Stock Exchange on Friday. Kambi is DraftKing’s current sports betting technology provider. (Image: SBTech)

According to Legal Sports Report, multiple sources have indicated the deal is on, although details are thin on the ground.

DraftKings was unable to confirm the rumors when contacted by LSR on Wednesday but neither did it deny them.

“DraftKings speaks to a variety of companies regarding various matters in the normal course of business, and it is our general policy not to discuss the specifics of any of those discussions,” was the official line from the company.

Keys to Oregon?

Isle of Man based SBTech has over 50 partnerships worldwide and has been active in the emerging US markets since the repeal of PASPA, forging multi-year sports betting partnerships with the likes of Pala Interactive, Churchill Downs and Golden Nugget Casinos.

Earlier this month, the State of Oregon chose SBTech to run its sports betting operations exclusively, which it hopes to launch by September, in time for the next NFL season. That would be a huge deal for DraftKings as it jostles for position in the US markets, effectively handing it the keys of the Oregon monopoly.

The Oregon Lottery estimates $141.2 million in sports betting revenues over the first three years

Should the deal go ahead, it will be interesting to see whether DraftKings will retain SBTech’s global business partners or whether the US-focused brand is primarily interested in the technology. SBTech also has some B2C operations, which might be sold.

LSR estimates a price tag of between $300 million and $500 million for SBTech.

Kambi Share-Plunge

The big loser in all this appears to be the Kambi Group, which agreed a multiyear deal to provide sports betting technology to DraftKings in June 2018. Kambi’s shares tumbled 20 percent on the Stockholm Stock Exchange in early trading following the publication of the LSR article, before rallying slightly on Friday.

Investors fear that Kambi may be about to lose its most powerful ally in the US. DraftKings currently leads sports betting in New Jersey, a market that last month overtook Nevada for the first time.

Earlier this week, SBTech announced it had hired its first president of US operations, Meissa Riahei, formerly General Counsel to the Illinois Lottery. Meanwhile, DraftKings has a new CFO, Jason Park, formerly an operating partner for Bain Capital Private Equity and an expert in investments and technology.

It’s not clear whether these appointments are related in any way to the M&A rumors.