September 2024 – OPINIAO-PUBLICA24-7

Veteran Gaming Regulator Calls for Uniform Rules to Protect Young Adults

A veteran gaming regulator who oversaw one of the country’s largest gambling markets says states should have uniform minimum ages to participate whether it be to enter a casino or buy a lottery ticket.

David Rebuck New Jersey gaming regulation — David Rebuck, then the director of the New Jersey Division of Gaming Enforcement, speaks at the opening of Ocean Casino Resort on June 28, 2018. Rebuck is calling on a series of reforms in the state to better protect young adults from problem gambling. (Image: *Press of Atlantic City*)

David Rebuck retired in March after leading the New Jersey Division of Gaming Enforcement (DGE) for nearly 13 years. As director of the state gaming regulatory agency, Rebuck was responsible for enforcing the state’s Casino Control Act, the governing framework for the nine casinos in Atlantic City.

Rebuck says New Jersey’s gaming regulations need updating, as many of the laws were put on the books decades ago and have become antiquated in today’s digital age where billions of dollars are being gambled online each year.

Rebuck believes the appeal of sports betting to young adults is of utmost concern.

The former DGE boss thinks sports betting’s allure has also mainstreamed gambling as a whole. Rebuck suggests New Jersey raise the minimum age to play daily fantasy sports and purchase lottery products from 18 to 21 to fall in line with the age requirement to enter a casino, place a sports bet, or access a regulated iGaming platform.

Uniform Age

New Jersey considers fantasy sports a contest of skill, not chance, and therefore it’s exempt from being regulated by the Casino Control Act. Controversial so-called skill games, online sweepstakes, and social casinos where no real money can be won also fall outside the scope of the New Jersey gaming law.

Rebuck says those channels are gateways to gambling and addictive behavior. He believes it would be smart to block young adults from getting their feet wet for three more years to provide ample time for those 18 to 21-year-olds to better understand the risks associated with the state’s many gambling channels.

Revising the age sends a powerful message that all gambling is an adult privilege. For some youth, gambling results in at-risk behavior with damaging lifelong consequences,” Rebuck wrote in a regulatory essay.

“Minors and 18 to 21 years old will undeniably benefit from the extra time to fully understand and prepare for any form of legal gambling engagement in the future,” Rebuck continued.

Internet Gaming Keeps Growing

Online gaming continues to bloom in the Garden State.

Internet slot machines and table games took $1.92 billion off of remote gamblers in 2023, a record high for New Jersey’s online casinos. Through eight months of 2024, iGaming gaming win is up another 23% to more than $1.52 billion.

In 2019, iGaming revenue totaled $482.7 million, meaning online gaming has grown 300% in just five years.

Sports betting continues to grow, too. Oddsmakers won an all-time high of more than $1 billion in 2023, a 32% year-over-year surge. Oddsmakers have kept $715.8 million of the bets wagered this year, almost 20% higher than they won through eight months last year.

In 2019, sports betting revenue totaled a little less than $300 million, meaning it has grown by 233% over five years.

Rebuck opposes a federal bill recently introduced to Congress that would impose regulatory conditions on states with legal sports betting. The proposed guidelines include banning all sports betting advertising between 8 a.m. and 10 p.m., and during all live sports programming.

Rebuck believes state gaming regulators — not politicians — are best suited to tailor their regulations.

“It’s mind-boggling to me the arrogance of saying ‘we know more than you do,’” Rebuck commented.

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SEC Charges DraftKings with Disclosure Violations Over Robins Tweet

The Securities and Exchange (SEC) announced today it charged DraftKings (NASDAQ: DKNG) with divulging nonpublic, material information over CEO Jason Robins’ social media accounts. The gaming company agreed to pay $200,000 civil penalty to settle the charges.

DraftKings CEO Jason Robins. The SEC fined the company $200,000 over some social media posts he made in July 2023. (Image: *CNBC*)

On July 27, 2023, Robins posted on his personal X (formerly Twitter) account that the company he co-founded continued to see “really strong growth” in the states in which it was offering iGaming and sports betting. Later that day, a public relations firm representing DraftKings posted similar remarks to Robins’ LinkedIn profile. Problem was those posts occurred a week prior to the gaming company releasing its second-quarter results.

According to the order, even though Regulation FD required DraftKings to promptly disclose the information to all investors after it was selectively disclosed to some, DraftKings did not disclose the information to the public until seven days later when it announced its financial earnings for the second quarter of 2023,” said the SEC in the statement.

While LinkedIn and X are widely trafficked forums, public companies cannot fulfill SEC disclosure guidelines simply by posting information relevant to investors on those sites because in the eyes of regulators, not all of a company’s shareholders rely on social media for investing information.

DraftKings Lawyers Have Been Busy

The SEC charged DraftKings “with violations of Section 13(a) of the Exchange Act and Regulation FD.” The gaming company neither admitted nor denied the findings in the order, but it pledged to refrain from future violations of those protocols.

The case added to an increasingly hefty workload for DraftKings lawyers. Last week, the Major League Baseball Players Association (MLPBA) sued four gaming companies, including DraftKings, claiming those operators are using player names and images without the consent of those athletes or the union.

That litigation arrived just weeks after the NFL Players Association (NFLPA) sued DraftKings, claiming the sportsbook operator potentially owes it tens of millions of dollars for using player names and images in its now defunct Reignmakers nonfungible tokens (NFTs) game.

DraftKings previously faced a class action complaint in which plaintiffs claim those NFTs were investable securities and that they suffered losses when the NFT market collapsed. In July, DraftKings shuttered its NFT marketplace and halted Reignmakers, pledging to provide some compensation to those that played the fantasy game.

Not First Time Robins’ Post Have Raised Eyebrows

The posts that drew the ire of the SEC aren’t the first instances of Robins flirting with controversy on social media. In an eight-tweet thread on X on March 28, 2023, the DraftKings chief executive officer commented on his bullishness about the company’s long-term outlook.

He didn’t explicitly mention the stock in those tweets and it’s a good thing, too, because that same day he sold 300,000 shares.

The SEC made no mention of the March 2023 posts. Under regulations set forth by the commission, any publicly traded company disseminating material information via social media must first tell investors on which platforms that data will be released.

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Tahoe Biltmore Casino Set for Auction, Waldorf Astoria Redevelopment in Question

The next chapter of the storied Tahoe Biltmore Lodge & Casino is in jeopardy after the development group that acquired the historic property in 2021 defaulted on a more than $100 million loan.

Tahoe Biltmore Nevada casino resort — The Tahoe Biltmore has sat closed for almost two and a half years. Its future remains unknown after a developer who had big plans for the property defaulted on a $110 million loan. (Image: X)

SFGATE.com broke the news that EKN Development, a real estate firm based in California’s Newport Beach, stopped paying back a loan it took out in 2021 to acquire the Crystal Bay property. EKN bought the Tahoe Biltmore for $56.8 million in September 2021 and shuttered its operations in April 2022.

EKN planned to demolish the tired lodge and casino to build a luxury resort with Waldorf Astoria managing its operations. The mixed-used design included a 76-room hotel and 61 private residencies.

Financial reasons have kept wrecking balls from meeting the Tahoe Biltmore. The property, which ran for 76 years, remains gated and boarded up, with its future unknown.

Auction Announced

First American Title has been appointed the trustee on behalf of the investors who EKN isn’t paying back. The settlement services provider says EKN’s loan with interest, fees, and other expenses is now upwards of $110 million.

EKN told SFGATE that it’s not insolvent and only trying to refinance.

EKN is working diligently to restructure the existing loan and expects to complete this process in the next three to four months,” said EKN President and CEO Ebbie Nakhjavani. “In the meantime, EKN is continuing to invest in the project and construction activities are continuing at the site.”

First American Title is moving forward with auction plans in the interim. The company has scheduled an Oct. 8 auction for the 15-acre property. That gives Nakhjavani less than two weeks to find new funding and pay back the original principal.

In April, when the news first broke that EKN wasn’t paying its lenders, Nakhjavani said “multiple institutions” were interested in his Waldorf Astoria vision.

The auction news is nonetheless yet another disappointment for the Crystal Bay community, which continues to be promised big investments to overhaul its once lively gaming and resort market that fail to materialize.

Oracle billionaire Larry Ellison had planned to invest heavily in renovating the storied Cal Neva, a Rat Pack hangout briefly owned by Frank Sinatra, after buying it in 2018 for $35.8 million. The billionaire’s enthusiasm waned during the COVID-19 pandemic.

Ellison eventually sold the historic property that straddles the California-Nevada border last year. Ellison also owns the Hyatt Regency Lake Tahoe, a resort he bought in 2021 for $345 million.

Waldorf Astoria Lake Tahoe Vision

The Waldorf Astoria Lake Tahoe, along with its hotel and residencies, was to include a resort pool and several restaurants highlighted by the luxury hotel brand’s signature Peacock Alley. A promenade with almost 19,000 square feet of retail shopping was also included in the Waldorf concept.

Gaming was additionally set to return, albeit in a smaller manner. EKN suggested it would build a 10,000-square-foot boutique casino with a few dozen slot machines and select table games.

The Tahoe Biltmore site was also to gain lake access for the first time. After acquiring the lodge and casino, EKN paid $18 million to purchase 10 run-down cabins on the Beesley Cottages property.

EKN planned to remove the cabins to transform the property into a 3.5-acre beach club. A shuttle was to transport guests to and from the Waldorf to the lakefront amenity that’s more than three miles away on the California side of town.

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NY Regulators Rips DraftKings’ Scrapped Surcharge Plan

It took DraftKings less than two weeks to pull the plug on a plan to levy winning sports bets in select high-tax states and it’s a good thing the company did that because had it proceeded, it apparently would have drawn the ire of New York regulators.

That state, which has the highest sports wagering tax in the US, along with Illinois, Pennsylvania, and Vermont, was at the center of the gaming company’s proposal to apply modest levies to winning sports bets. Customers immediately decried the move, saying it amounted to DraftKings passing its tax exposure onto clients. The proposed move didn’t sit well with New York State Gaming Commission Chair Brian O’Dwyer, either, who said he viewed the plan “with great alarm.”

I view that proposal as both misleading and detrimental to the consumer,” O’Dwyer said at the commission’s Monday meeting. “I am, of course, pleased that the proposal has been withdrawn, and I remind all our licensees, however, that this commission is committed to protecting the consuming public, and that any proposal such as the one advanced by DraftKings will be a subject to the strictest scrutiny, and if appropriate, be rejected.”

New York applies a 51% tax rate to online sports betting.

DraftKings Swiftly Killed Surcharge Idea

DraftKings unveiled the surcharge plan when it delivered second-quarter results on August 1, after rivals BetMGM and Caesars Sportsbook reported financial results without making mention of a similar tax plan.

For DraftKings, the scenario soon worsened with competitor Rush Street Interactive taking a clear shot at its larger rival, announcing on August 5 that it had no plans for tax on winning bets. The final nail in the coffin of the DraftKings tax gambit arrived on August 13 when FanDuel parent Flutter Entertainment reported second-quarter results, noting it wouldn’t be implementing a surcharge.

Within an hour of the Flutter report, DraftKings announced that it listened to its customers and decided to abandon the four-state surcharge plan. For its part, New York knows it has the advantage of being the fourth-largest state in the country and currently the largest with a competitive online sports betting market, meaning it doesn’t need to change its tax structure to benefit operators.

“New York remains an attractive venue for those who are in the business of sports betting, and I see no reason why we should alter our present regulatory or taxing environment,” added O’Dwyer.

Operators Looking for Ways to Deal with High Taxes

In some populous states like Illinois, New York, and Pennsylvania that gaming companies want to operate in, high sports betting taxes are simplay a fact of life. The need to be in those states and others is prompting operators to examine avenues through which they can deal with those taxes while continuing to generate and grow profits.

For its part, FanDuel said it will trim promotional spending in Illinois. In July, that state launched a graduated tax system on online sports betting, meaning higher revenue operators such as FanDuel and DraftKings will now pay substantially more than smaller competitors.

At Bank of America’s Gaming and Lodging Conference earlier this month, DraftKings CEO Jason Robins said the company is examining remedies when it comes to contending with high taxes, adding it’s nonsensical for “anybody to completely just eat any tax increase that happens anywhere.”

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OpenBet Could Sell at Steep Discount, Says Research Firm

Endeavor Group Holdings, Inc. (NYSE: EDR) is shopping its OpenBet and IMG Arena sports betting data businesses and the former could sell for a significant discount to the price the seller originally paid.

Endeavor Group CEO Ari Emanuel. The company may be forced to sell OpenBet at a significant discount to the $800 million it paid for the business in 2022. (Image: *Bloomberg*)

Endeavor is moving on from OpenBet after announcing in September 20221 that it would pay $1.2 billion to the company then known as Scientific Games for the business. That price was reduced to $800 million in June 2022. In a new report, Eilers & Krejcik Gaming (EKG) said it’s possible OpenBet could sell for $300 million if a prospective buyer discovers during the due diligence process that Flutter Entertainment (NYSE: FLUT) is considering moving the business it directs to OpenBet in-house.

Flutter hasn’t publicly said that such a move is under consideration, but that company and other UK-based sportsbook operators are major clients of OpenBet.

OpenBet is still at the heart of sports betting infrastructure. It powers Flutter’s UK (and Australian) sportsbooks and is also at the heart of Entain’s and Evoke’s UK offering (though all three firms are keen to downplay its significance),” observed EKG.

The research firm added that part of the reason for the potentially large discount on OpenBet’s sale price is because the technology provider has lost a fair amount of its US business as operators in this country have brought tech stacks in-house.

List of OpenBet Suitors Isn’t Long

EKG also pointed out that the list of prospective suitors for OpenBet isn’t long. After it completes its $6.3 billion acquisition of Everi (NYSE: EVRI) and International Game Technology’s (NYSE: IGT) global gaming and PlayDigital units, Apollo Global Management (NYSE: APO) could make a run at OpenBet, said EKG, but that’s not a guarantee.

Likewise, a management buyout (MBO) could be on the table. Should OpenBet executives decide to pursue that avenue, it’s possible they’ll easily be able to procure the needed financing because lenders would be eager to extend credit with the business selling at a discount. OpenBet management hasn’t said such a transaction is under consideration.

“Most likely, though, in our view, is that private equity or some kind of fund swoops in, thanks to the discount and strong recurring revenues,” added EKG.

The research firm said such a transaction could materialize over the next month or two and would result in OpenBet being left largely as it is today.

What About IMG Arena?

As noted above, Endeavor also has its IMG Arena sports betting data unit on the block. What price that business could fetch in a sale isn’t widely known and there’s talk some logical would-be buyers probably aren’t interested.

“It’s hard to see past fellow data giants Genius Sports (NYSE: GENI) and Sportradar (NASDAQ: SRAD) as acquirers,” according to EKG.

Earlier this month, Genius was linked to takeover chatter pertaining to Sweden’s Kambi Group Plc (OTC: KMBIF), but both sides denied that rumor.

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Playtika Paying Up to $1.25B for SuperPlay

Mobile games developer Playtika (NASDAQ: PLTK) said Wednesday it’s paying $700 million to acquire rival SuperPlay, with an additional contingent consideration that could bring the purchase to $1.25 billion.

Joffre — Playtika is highlighted at the Nasdaq market site. The company is buying rival SuperPlay for up to $1.25 billion. (Image: *Wall Street Journal*)

The boards of both Israel-based companies have approved the deal. Playtika noted the final acquisition price could be $1.25 billion if closely held SuperPlay achieves “certain financial targets for 2025, 2026, and 2027.” Those include adjusted earnings before, interest, taxes, depreciation, and amortization (EBITDA) and sales objectives. The acquisition boosts Playtika’s exposure to the board and coin looter segments of the mobile gaming space.

Founded in 2019 by former Playtika employees Gilad Almog and Eyal Netzer, along with industry veteran Elad Drory, SuperPlay has emerged as expert game makers with two successful titles — Dice Dreams, a fast-growing Coin Looter game, and Domino Dreams, a popular Board game, and two more games currently in development,” according to a statement issued by Playtika.

The transaction is expected to close in the fourth quarter.

Why the Deal Matters for Playtika

Shares of Playtika are off 22% over the past 12 months and in the more than three years since the company’s initial public offering (IPO), investors have fretted about monthly user growth and a dependence on a small number of titles such as Bingo Blitz, Caesars Slots, Slotomania, and World Series of Poker (WSOP).

The purchase of SuperPlay may allay some of those concerns by bringing new growth outlets into the Playtika portfolio — one that has grown via acquisition and includes some of the highest-grossing mobile games in the various app stores.

“In 2024, both Dice Dreams and Domino Dreams have grown rapidly, boasting a combined 1.7 million Average Daily Active Users as of August,” added Playtika in the statement.

Former Playtika staffers Gilad Almog and Eyal Netzer founded SuperPlay in 2019 and will continue running SuperPlay as an independent studio under the Playtika umbrella.

SuperPlay Brings Growth to Playtika

SuperPlay could immediately improve Playtika’s top line due in part to the success of the aforementioned Dice Dreams. That game was released in 2024 and as of July, it surpassed $400 million, helped in large part by the 2021 release of rival Monopoly Go!

In the three years previous to MONOPOLY GO!’s release, Dice Dreams grossed $125 million: a significant success by most standards. However, since MONOPOLY GO!’s release, Dice Dreams has become supercharged, earning the remaining $275 million to hit this $400 million milestone in a year and a few months,” noted SensorTower.

The research firm pointed out that the US is the primary market for both games and that while the Monopoly game has proven popular, it hasn’t disrupted Dice Dreams’ market share.

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$2.7B Kindred Group Takeover by French Lottery Giant FDJ Approved — With Caveat

French antitrust regulators have approved the proposed $2.7 billion acquisition of Stockholm-listed online gambling giant the Kindred Group by Française des Jeux (FDJ), France’s lottery monopoly.

FDJ, Kindred, l’Autorité de la Concurrence — FDJ will likely acquire Kindred to create a “European gaming champion” but it must keep its monopoly business completely separate from the new brands. (Image: FDJ)

However, regulator l’Autorité de la Concurrence (the Competition Authority) insisted there must be a clear separation between FDJ’s commercial activities and its monopolistic business. That means FDJ, a former state-owned corporation, won’t be permitted to cross-sell Kindred’s products to its lottery and sports betting customers.

Moreover, it must not “share a common root or logo with the FDJ or Parions Sport Point de Vente brands, or any other brand under which FDJ markets its monopoly games in France,” l’Autorité de la Concurrence said. Players will have to sign up separately for accounts with FDJ and Kindred brands.

Failure to do so would give FDJ an unfair advantage over rival commercial operators, the regulator concluded.

Monopoly Money

Kindred, formerly Unibet Group, owns some of Europe’s best-known online casino and sports betting brands, including Unibet and 32Red.

FDJ, the largest gambling operator in France, was privatized in 2018 when the French government sold off 50% of its ownership. In November 2023, the company acquired Ireland’s national lottery operator, Premier Lotteries Ireland, making it the second-largest lottery operator in Europe and the fourth-largest globally.

In October last year, FDJ completed its acquisition of online horserace betting site ZEturf, the only segment of the gambling market it had not yet entered. ZEturf is also subject to separation from the company’s monopolistic brands.

ZEturf’s main competitor is, ironically, France’s retail horse race betting monopoly Pari-Mutuel Urbain (PMU). PMU was fined €900K by l’Autorité de la Concurrence in 2020 for failing to separate its land-based and online customer bases.

That followed a complaint by ZEturf that PMU’s co-mingling of the two channels helped it gain an unfair advantage over other operators offering horse racing pools.

‘Gaming Champion’

Following news of the Kindred takeover bid in January, FDJ Chair Stéphane Pallez said the deal would create a “European gaming champion.”

In a somewhat scathing note, Regulus Partners suggested Kindred’s real attraction was that “it allows excess cash flow generated from a privatized state monopoly to be pumped into a ready-made competitive platform which the sclerotic, statist FDJ failed organically to create.”

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Standard General Bally’s Acquisition Unlikely to Face Antitrust Threats

Standard General’s proposed $18.25 per share takeover of Bally’s (NYSE: BALY) appears unlikely to face antitrust scrutiny from federal regulators because the related waiting period on that matter is set to expire at midnight Monday.

Citing two unidentified sources close to the matter, CFTN reported Monday that the Hart-Scott-Rodino (HSR) Act guidelines pertaining to the deal will expire Monday night, with no need for Standard General to file a second request with federal regulators.

Under the Hart-Scott-Rodino (HSR) Act, parties to certain large mergers and acquisitions must file premerger notification and wait for government review. The parties may not close their deal until the waiting period outlined in the HSR Act has passed, or the government has granted early termination of the waiting period,” according to the Federal Trade Commission (FTC).

Standard General — the hedge fund that’s the largest investor in Bally’s — floated a $15 per share takeover offer in March. That was upped to $18.25 a share, which the regional casino operator accepted in July.

Standard General Bally’s Buy Not Big Enough to Draw FTC Concern

The proposed deal assigns an enterprise value of $4.6 billion to Bally’s and while that isn’t a small amount of money, it’s not the price point at which the FTC would consider making the buyer make adjustments to the initial deal structure.

Rumors that Standard General is passing HSR mandates with aplomb arrived as there’s mounting concern in the business community that under Chairwoman Lina Khan, the FTC has taken too hard a line against industry, including moves to stifle some large-scale mergers and acquisitions.

For example, the FTC sued to block the $24.6 billion merger of Albertsons and Kroger — the largest deal on record in the grocery store industry — because it’s anticompetitive. Some states have taken up that mantle, too, and have launched their own antitrust investigations into the merger.

Some Democrat donors have reportedly encouraged Vice President Kamala Harris to fire Khan should the former win the presidential election in November. The Harris campaign hasn’t publicly said if such a move is on the table.

Next Steps for Standard General

With federal antitrust concerns apparently not an issue, the next step for Standard General is dealing with regulators in the states in which Bally’s operates land-based casinos. Those are Colorado, Delaware, Illinois, Indiana, Louisiana, Mississippi, Nevada, New Jersey, and the gaming company’s home state of Rhode Island.

Due to Standard General being a hedge fund and not a direct competitor to Bally’s, significant job loss or venue closures appear unlikely to result from the acquisition, which could be the liking of state gaming regulators. Likewise, it appears unlikely that a spate of asset sales will be required as has been the case with larger gaming industry mergers.

Standard General is aiming to have the Bally’s acquisition wrapped up in the first half of 2025.

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Flutter Deal for Playtech Consumer Biz Reportedly Imminent

Flutter Entertainment (NYSE: FLUT) could reportedly reach a $2.62 billion deal to acquire Playtech’s (LSE: PTEC) Snaitech unit as soon as this week.

Flutter FanDuel — The Flutter logo at a corporate office. The company is reportedly close to acquiring Playtech’s consumer business for $2.6 billion. (Image: *The Independent*)

Shares of the prospective seller posted a double-digit gain in London trading on Monday after media reports surfaced indicating the two companies could reach an agreement in the coming days. Should that price be what Flutter offers, it would represent the entirety of Playtech’s market capitalization.

Speculation regarding Flutter’s interest in Snaitech began last month with Playtech ultimately confirming it was in talks with the Paddy Power owner.

Snaitech is one of the largest gaming companies in Italy and should Playtech shed that entity, the seller would have no consumer-facing operations, allowing it to focus on its business-to-business technology offerings. Playtech’s Monday surge was aided by news that the company reached an agreement with Mexican gaming firm Caliente regarding a long-standing argument over payments purportedly owed to Playtech. It’s also possible that if Playtech sells Snaitech, bidders could emerge for the former’s tech business.

The sale of Snaitech, will leave Playtech as a business-to-business provider of software, and, according to analysts, is likely to result in a formal takeover bid in the medium term,” reported Mark Kleinman for Sky News.

Last month, Playtech granted Flutter a period of exclusivity to perform due diligence on Snaitech, indicating the seller is not yet fielding offers from other suitors.

Snaitech Buy Keeps with Flutter Tradition

Should it reach a deal for Snaitech, the purchase would extend Flutter’s tradition of deal-making that’s allowed the operator to bolster its footprint in Europe, including in Italy where it’s already one of the largest gaming operators.

Two years ago, Flutter paid $2.2 billion for Italian lottery giant Sisal. Before that acquisition, the Dublin-based company was operational in Italy via its PokerStars and Betfair units, which have some of the largest market share in that country.

Italy is an attractive market for a company for multiple reasons. It’s the third-largest economy in the Eurozone and is Europe’s largest regulated gaming market outside of the UK, meaning a presence there diversifies Flutter’s revenue stream while reducing reliance on the UK.

Although it’s already a large market within the European wagering scene, Italy is rapidly growing thanks to the evolution of iGaming, a sector in which Snaitech has some leverage. Snaitech also operates in Austria and Germany, but is a smaller player in those countries.

Flutter’s Been Acquisitive of Late

Snaitech isn’t the only potential acquisition Flutter is working on. Last week, the company said it’s spending $350 million in cash to buy a 56% stake in Brazil’s NSX Group, which controls the popular Betnacional brand in that country.

Under the terms of that agreement, Flutter has the right to increase its interest in NSX five and 10 years after the initial deal is finalized. That’s expected to happen by the second quarter of 2025.

Flutter is the parent of FanDuel, the largest online sportsbook operator in the US.

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Flutter Pays $350M for Majority Stake in Brazil’s NSX Group

Flutter Entertainment (NYSE: FLUT) said it acquired a 56% stake in Brazil’s NSX Group for $350 million in cash to bolster its footprint in that country.

The Brazilian flag flying against a background of the Christ the Redeemer statue — The Brazilian flag. Flutter is paying $350 million for 56% of NSX to expand in that country. (Image: iStock)

NSX operates the Betnacional brand. Including Betnacional, NSX is the fourth-largest iGaming and online sportsbook company in Brazil. Importantly to Flutter, the target is already profitable. Flutter said NSX is expected to generate 2024 revenue of $256 million on adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $34 million.

Dublin-based Flutter said it will combine its 56% interest in NSX with its Betfair business in Brazil. Under the terms of the agreement, Flutter and NSX have “reciprocal put/call arrangements” by which Flutter can increase its interest in the Brazilian gaming company five and 10 years after completion of the original purchase.

The $350 million transaction, which was announced last Friday, is scheduled to close by the second quarter of 2025.

NSX Buy Could Be Smart Move by Flutter

Flutter taking a stake in NSX could prove to be a prescient move because Brazil is slated to fully regulate its iGaming and online sports betting markets at some point next year.

That’s expected to open the floodgates for international operators to bid for licenses in the country. Flutter has an advantage because it’s already established in Brazil, but partnering with a local company like NSX could be viewed favorably by regulators and it’s a move some rivals have signaled they’ll employ as well.

For gaming companies, the allure of Brazil is undeniable. The country is Latin America’s largest economy and is home to more than 200 million people. Data confirm it’s also a rapidly growing betting market, adding to the attraction for international gaming companies.

“Strong demand for sports betting and iGaming products with compound annual gross gaming revenue (GGR) growth in the unregulated market of 38% since 2018, to almost $3 billion in 2023,” according to a statement issued by Flutter.

Brazil’s Booming Gaming Market

In the eyes of many US investors, Flutter is viewed as the parent of FanDuel — the largest online sportsbook operator in this country – and while that’s accurate, the company has a massive international footprint that includes exposure to Australia, Europe, and Latin America.

The acquisition of the NSX stake is the latest in a series of shrewd buys by Flutter that have enabled the operator to add market share in countries around the world. Flutter pointed out that NSX entered the Brazilian market in 2021, and since then, has amassed a 12% sports betting share and a 9% overall share in internet gaming. The Irish company added that Betfair Brazil could deliver 2024 sales of $70 million.

“Flutter Brazil will be exceptionally well positioned to take full advantage of the significant growth opportunity in the newly regulating Brazilian market,” concluded Flutter in the statement. “In line with our successful strategy in other newly regulated markets such as the US, we expect to drive market share growth and embed future profitability through disciplined customer investment. This is expected to result in a Flutter Brazil adjusted EBITDA loss of approximately $90 million to $100 million in 2025.”

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