Monday, December 5, 2022
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Scientific Games Selling OpenBet to UFC Parent Endeavor Group for $1.2 Billion in Cash, Stock

Scientific Games (NASDAQ:SGMS) is selling its OpenBet sports wagering business to Endeavor Group Holdings, Inc. (NYSE:EDR), the parent company of the Ultimate Fighting Championship (UFC), for $1.2 billion in cash and equity.


Under the terms of the agreement, Los Angeles-based Endeavor is paying $1 billion in cash and $200 million of its shares to purchase OpenBet.


OpenBet is one of the world’s leading global online sports betting technology companies, offering an ecosystem of sports content, technology and services to the largest operators around the world,” according to a statement issued by Scientific Games. “To date, OpenBet has over 75 global customers, including 24 sports books across 12 states and a 100 percent uptime record across major sporting events.”


In late June, Scientific Games announced plans to divest OpenBet and its SG Lottery unit in an effort to reduce its debt burden. At that time, it was believed the separations could come in the form of an initial public offering (IPO), a merger with a special purpose acquisition company (SPAC), or an outright sale or a combination with another entity.


Endeavor Endeavoring Into Sports Wagering

OpenBet will likely be folded into Endeavor’s Owned Sports Properties segment, which includes UFC, the Professional Bull Riders (PBR) and Euroleague.


OpenBet could be a sensible addition for the company that also runs the IMG Academy, produces live events and controls one of Hollywood’s biggest talent agencies. Endeavor also operates IMG Arena, which provides streaming video and data services to sportsbooks, indicating there are potential synergies by adding OpenBet to the mix.


Although UFC is popular among bettors, possible conflicts of interest by adding OpenBet should be non-existent because OpenBet isn’t a consumer-facing sportsbook. Rather, it’s platform and technology provider that counts gaming operators among its clients. Those include DraftKings, FanDuel, William Hill and WynnBet.


“This capability set is the ideal complement to our IMG ARENA sports betting business, which works directly with sports rights holders. We look forward to growing these businesses together to capitalize on the strong secular tailwinds in the sports betting ecosystem,” said Endeavor CEO Ariel Emmanuel in the statement.


Another Transaction Looming for Scientific Games

The sale of OpenBet is scheduled to close in the second quarter of 2022.


In the meantime, Scientific Games is mulling options for the SG Lottery unit. Recent speculation indicates the company may be leaning toward listing the business in Australia where the initial public offering (IPO) could command a valuation of $5 billion.


However, private equity firms Apollo Global Management (NYSE:APO), Carlyle Group, and TPG Capital are said to be considering bids for the lotto business.


Scientific Games said last week that if it commences an IPO of SG Lottery, it will retain only a minority interest in the newly public entity.

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