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Scientific Games announced on Monday that Endeavor would purchase its OpenBet business, capping a three-month process to divest its sports-betting division.
Endeavor, a sports and entertainment company whose holdings include the Ultimate Fighting Championship (UFC) and betting data provider IMG Arena, will pay $1.2bn to purchase the business, with $1bn being paid in cash and $200m being paid in Endeavor stock.
In a statement, Endeavor CEO Ariel Emanuel described the OpenBet deal as a “strategic addition” allowing the company “to expand our footprint across the entire sports betting value chain and further capitalize on the tremendous upside we see coming from this fast-growing global industry.”
“OpenBet’s suite of offerings combined with IMG Arena’s content feed and front-end solutions will create a best-in-class proposition for sportsbooks and rights holders,” Emanuel added during a brief investor call on Monday. “It’s a full tech stack combined with a fan-first approach to content designed to maximize consumer engagement and handle.”
Two dozen sports-betting operators currently use elements of the OpenBet platform across 12 U.S. states, including many of the top U.S. operators such as FanDuel, DraftKings, and BetMGM.
Scientific Games acquired the OpenBet platform in early 2018 as part of a $630m deal for online gambling provider NYX Gaming.
Scientific Games announced in June it would look to divest its sports-betting and lottery businesses to focus on the land-based and internet gaming markets, which it serves through slot machines, online casino game content and the OpenGaming platform.
On Friday, the company announced it was seeking to reach agreement with note-holders on amended terms as it explores a possible initial public offering (IPO) of its lottery division, with Scientific Games to retain a minority interest in the business should an IPO be pursued.
“This transaction represents the culmination of a thorough process to divest OpenBet in order to maximize value for our shareholders and rapidly advance our vision to become the leading cross-platform global game company,” said Scientific Games CEO Barry Cottle.
“The transaction is a significant milestone towards optimizing our portfolio and de-levering the balance sheet to enhance our financial flexibility.”
MGM Acquires Cosmopolitan, Still Has Cash For Entain
The OpenBet sale was not the only billon-dollar gaming transaction to be announced on Monday, as MGM Resorts International announced it will purchase the operations of Cosmopolitan of Las Vegas casino-resort from private equity powerhouse Blackstone for $1.625bn in cash.
Blackstone’s real-estate arm is also selling the Cosmopolitan real-estate assets to a combination of Cherng Family Trust, Stonepeak Partners and Blackstone Real Estate Income Trust for about $4bn, after which MGM Resorts will sign a 30-year lease agreement and pay initial annual rent of $200m, with 2 percent raises for the first 15 years and further raises for the second half of the lease.
The Cosmopolitan is sandwiched in between the Bellagio and City Center, both of which are already operated by MGM.
“We are proud to add The Cosmopolitan, a luxury resort and casino on the Las Vegas Strip, to our portfolio,” said MGM Resorts CEO Bill Hornbuckle. “The Cosmopolitan brand is recognized around the world for its unique customer base and high-quality product and experiences, making it an ideal fit with our portfolio and furthering our vision to be the world’s premier gaming entertainment company.”
MGM Resorts stock improved just over 1 percent Monday following the announcement of the deal, closing at $45.09 per share.
“While one could argue MGM has enough Las Vegas exposure and management has discussed potential regional expansion, we think the deal makes sense from a strategic perspective (strong brand/property adjacent to MGM properties) while offering modest financial accretion,” said Barry Jonas, an analyst at Truist Securities, in a note to investors.
Jonas also said that MGM not emptying its near $4.5bn war chest accrued from the sale of its Las Vegas real-estate holdings to purchase the Cosmopolitan could bear well for the company to go head-to-head with DraftKings in its efforts to purchase London-listed Entain, its partner in the BetMGM joint venture.
“We also think MGM spending (about) 15 percent of its dry powder here may suggest they’re less willing to make a run at all of Entain vs. our favored approach of just acquiring all of BetMGM,” Jonas said.
