Entain Acquires Sports Interaction Ahead Of Ontario Opening

February 8, 2022
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Entain has acquired the parent company of Avid Gaming and its online betting and gaming brand Sports Interaction for approximately $235m (C$300m) as it prepares for the transition to a regulated market in Canada's largest province.

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Entain has acquired the parent company of Avid Gaming and its online betting and gaming brand Sports Interaction for approximately $235m (C$300m) as it prepares for the transition to a regulated market in Canada's largest province.

The company, which already operates the Bwin and PartyPoker brands in Canada and owns 50 percent of BetMGM in the U.S., said it had acquired Avid Gaming from Middlebrook Investments as it gears up for expansion in Canada’s recently opened sports-betting market.

Entain has already applied for a registration to operate sports betting and online gaming in Ontario with the province’s Alcohol and Gaming Commission and iGaming Ontario, with that market set to launch on April 4.

“Sports Interaction is the leading Canadian sports betting and gaming brand and is aligned perfectly with our own ambitions of great customer service and ambitious growth, coupled with an unwavering commitment to sustainability,” Entain CEO Jette Nygaard-Andersen said in a statement announcing the deal on Monday (February 7).

Nygaard-Andersen said the acquisition is also “highly complementary of our existing operations in Canada.”

Entain is among the various international operators in Canada’s grey market that are preparing to switch over to a regulated market in Ontario in April.

“We expect that we will be able to pretty seamlessly continue operations,” Nygaard-Andersen told analysts during a fourth-quarter trading update last month.

Andersen said the company was still awaiting “the last license details” from Ontario officials. “But that’s our expectation that we wouldn’t have to stop operation and then turn it on again.”

Sports Interaction is operated by Mohawk Online, which is owned by the Mohawk Council of Kahnawake and is regulated by the Kahnawake Gaming Commission in the province of Quebec. Avid Gaming exclusively licenses the Sports Interaction product and is based in Jersey with offices in Ireland and Quebec.

Will Golby, CEO of Avid Gaming, and other members of the executive team will join Entain as part of the transaction.

In December, Sports Interaction became the official sports-betting partner in Canada of the National Lacrosse League. It is also an official partner with the Hamilton Tiger Cats, Ottawa Redblacks, Winnipeg Blue Bombers and Edmonton Elks of the Canadian Football League, according to the company's website.

Sports Interaction recorded a 40 percent increase in gross revenues in 2021 to $59.5m (C$76m). Profits before taxes last year were $13.6m (C$17.4m).

Entain’s acquisition of Avid Gaming is expected to deliver approximately C$15m of synergies in 2023, from technology, content and procurement benefits, Entain said.

“This results in a post synergies acquisition multiple for Entain of approximately seven times 2023 EBITDA. The consideration for the acquisition has been paid from existing facilities,” the company said.

Analysts from London-based Regulus Partners said there was "a lot to like" about the deal, but warned of the uncertainties of a changing playing field as new regulations come into effect.

"Acquiring a powerful local brand, an influential local voice and local operational capability before Ontario opens clearly has strategic merit and considerable operational potential for Entain. However, there are a few occasions when stakeholders sell what looks like an invaluable and well-placed asset at just the right time before all the rules of the game change. The Mohawks may well have just pulled that off," they said.

The regulated Ontario market promises to be a uniquely competitive one.

Several operators, including Penn National Gaming’s theScore, PointsBet and local operator Rivalry, all announced last week that they had already received a certificate of registration from the Alcohol and Gaming Commission of Ontario. The companies still need to execute a commercial contract with iGaming Ontario, however.

Others waiting in the wings include U.S. market-leaders FanDuel, DraftKings and Entain's own BetMGM.

Outside Ontario, Alberta gaming regulators are also accepting bids from perspective operators that want to be licensed to offer retail and online sports betting. Unlike Ontario’s open market, Alberta Gaming Liquor and Cannabis will limit the province’s market to sports betting and to no more than two operators.

The Entain deal for the prominent Sports Interaction was not the only evidence of the new era in online gambling and sports betting in Canada on Monday.

Elsewhere, the Ontario Lottery and Gaming Corporation (OLG) announced that it had become the NFL's first official sportsbook partner in Canada.

The deal sees OLG's ProLine sports-betting product become the exclusive “official retail lottery and sportsbook partner” of the NFL in Ontario.

Additional reporting by James Kilsby and Joe Ewens

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