Barry Jonas, Truist Securities: Digital markets seeing more pressure for profitability

Barry Jonas, Truist Securities

M&A activity in the US sports betting and igaming markets is becoming more driven by the search for profitability rather than just potential, according to Barry Jonas, Managing Director of Truist Securities. 

Ahead of his participation in next week’s SBC Summit North America conference in New Jersey, Jonas shared his views on what this may mean for the operator, affiliate, and B2B supplier segments of the market. 

Could you start by giving our readers an overview of Truist’s services for the sports betting and gaming industries?

Truist Securities is the investment banking arm of Truist Financial Corporation. Truist was formed in 2019 with the merger of SunTrust and BB&T. Today we are one of the largest commercial banks in the United States. The bank is deeply committed to the gaming industry, having a long-standing relationship lending and advising the wider sector – mostly with a North American focus. 

I’ve been around the gaming space since 2003, both at corporate and Wall Street. I’ve led the gaming equity research platform at Truist Securities and its predecessor company since 2018. 

My group focuses almost exclusively on US-listed gaming companies, which includes digital and land-based operators, B2B technology suppliers, affiliates, and gaming REITs.  

We provide our clients with detailed quantitative and qualitative analysis into the many companies we follow, as well thoughts on worldwide gaming industry trends.

There has been significant gambling sector M&A activity, both in the US and globally, over the past two years. How do you view the current market and are there any trends to look out for?

With digital markets seeing more pressure now for profitability, it’s logical to see consolidation in the space to look for synergies and better efficiencies. Consolidation makes sense given the abundance of offerings but concentration of market share with a small number of operators. 

Additionally, we’re seeing some players hanging by the hoop and expect a second wave of operator entrants to emerge – especially via M&A.

Affiliates have become an increasingly important – not to mention profitable – presence in US markets as operators have invested huge sums in player acquisition. Can we expect to see more takeover activity around leading affiliates and, if so, what sort of buyer might they attract?

There are benefits in scale in the affiliate market, which today is largely fragmented and has more limited barriers to entry. We see more consolidation here, and as the larger players get bigger they potentially see more attention from institutional investors. 

We could also see other B2B media and technology players explore entering the affiliate space via M&A given there may be similar operator bases and end users, while affiliates have strong profitability and ROI characteristics.

While operators may enjoy the highest public profiles, some of the biggest success stories in the industry are the B2B technology providers. What is likely to drive the next round of M&A activity in this sector of the market – operators keen to secure control of critical technology, established B2B suppliers viewing acquisition of innovative smaller rivals as clever R&D investment, or investors from outside the industry seeking short-term profits?

With interest rates moving higher, the cost of financial engineering is more expensive, which points to strategic M&A being in pole position for M&A. We think differentiated content creators are desirable B2B targets, certainly relative to more commoditized back-end plumbing. 

The number of games digital igaming operators carry is many multiples of what traditional land-based casino floors carry. Small design studios don’t always have the reach and distribution necessary to succeed on a wider scale. We see more consolidation happening here, noting aggregators are in a great position to acquire studios given they can see what’s working and also have more capabilities around distribution and placement.

As we speak today, the rhetoric around the industry’s growth and potential in the US and Canada is overwhelmingly positive. What factors might see investors take a different view of the long-term opportunity and adopt a more cautious approach than we have seen recently? 

A lot will rest on what the US states do. Continued legalization of online sports betting, and perhaps some igaming, would reinforce positive views while the opposite would clearly not. 

Profitability is really more of a focus today by investors than revenue, and I’d say the rhetoric there is markedly more negative. Many companies have maintained profitability is coming next year, and that will be the key focus point. The reduction in promo and marketing expenses and new state legalizations with reasonable tax rates will be key in the realization of profitability. 


SBC Summit North America 2022, the leading conference and tradeshow for the sports betting and igaming industries in the region, takes place at Meadowlands Exposition Center, New Jersey on July 12-14.

Barry Jonas will be taking part in the ‘Brands, brands, brands – will M&A activity follow the battle of the brands?’ session on July 13 and the ‘Affiliate Leaders panel – educating players and operators’ on July 14.

Tickets for the event, which include access to all eight conference tracks, an exhibition showcasing the next generation of industry products, and entrance to a selection of evening networking parties, can be booked at the SBC Summit North America website