As America’s sports betting industry continues to develop, mergers and acquisitions firms have been seen as integral to strengthening overall brands. However, at the SBC Digital Summit this week, the topic took on a different hue as panelists instead discussed the validity of M and A in the country and if it is the only route to take during America’s sports betting boom.
Wayne Kimmel, Managing Partner, SeventySix Capital, spoke at the Summit’s ‘M & A and Investing in Sports Betting Companies’ session about how now is the time for entrepreneurs to invest in the sports betting industry and start building their portfolios to challenge some of sectors biggest players.
He said: “This is very similar to the late 90’s of the internet when there was this opportunity where entrepreneurs came in and really disrupted the way we not only did business but the way we lived and the way we do things. Similar to what happened then, I believe that same kind of thing is going to happen here within sports betting.
“I believe that there will be a lot of M and A’s but at the same time there will be players that will come out of nowhere that you have never heard of before. You’ll see there will be the next Steve Jobs or the next Mark Zuckerberg, there will be those types of players in the industry.”
Fellow panelist Adam Greenblatt, the CEO of Roar Digital on the other hand had a differing opinion on Kimmel’s idea that entrepreneurs will be able to massively impact the betting landscape. He said: “I disagree actually with some of the views previously expressed not because they are not logical but because they underestimate the role of compliance and the impact of state-by-state as this market roles out.
“In the early stages of the internet what, as a global collective, we were doing was breaking new grounds enabled by technology. The US is just a new geographical frontier where now a really mature industry is able to penetrate it.
“I think it is not possible in this generation for a start-up to unseat the global market leaders. M and A will take place at the very highest level and there will be some vertical integration placed but I think to bring together a collection of disparate assets or to grow from grassroots into something that can compete for leadership I think is too difficult.”
The panel also went on to discuss how COVID-19 will affect laws on gambling with certain states still having strict guidelines when it comes to the gaming sector.
Tom DiEnno, Managing Director, KPMG Philadelphia, stated: “I certainly think it’s going to change the way states view the way they can get tax revenue in. You have some states where you still have to go and sign up at a casino in order to get online. That’s not helpful right now because the casino is closed.”
“You’re going to see a lot more from the states whether it is online, mobile or route gaming. States are going to look at other cash channels to get their revenue that way and that will help it (loosen gambling laws).”
Whilst sports betting has been in practice for generations, it was only recently when America started opening its doors to legal live-sport wagers. Julian Fialkow, Drive by DraftKings’ Senior Investment Associate, discussed the difference between the American market as opposed to countries like the UK.
He explained: “I think it comes down to the digitisation of our products and the fan engagement. Whereas as you see the stuff over in the UK is a lot of brick and mortar, a lot of it is more bare bones. However they have had the industry a lot longer than us so it was efficient, it worked and people are used to it.
“However, in the US you see people who need that more user-friendly interface and that experience overall. Really owning the product and the fan engagement on the US side, quote me if I’m wrong, is where I see the big difference in separation.”
The panel, which also discussed a variety of topics such as how sports betting start-ups can succeed in the industry, was sponsored by FSB and moderated by Sharp Alpha Advisors’ Founder & CEO Lloyd Danzig.
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