The maneuvering within the casino gaming and sports betting sectors shows no sign of slowing, with yet another eight-figure acquisition deal struck this month. This time, the buyer is Toronto-based Elys Game Technology, a rapidly growing sports betting platform provider. It has just agreed the purchase of Nevada-based US Bookmaking, which provides a range of sports betting services, including design, consulting, risk management and turnkey solutions.
In essence, Elys provides the underlying technology and US Bookmaking (USB) offers effective solutions for US online casino operators so they can smoothly open and manage a sports book. It’s a combination that could prove powerful against the backdrop of the ever-growing sports betting sector in the US. The deal is done.
The mechanics of the deal
The transaction has been structured as a membership interest purchase agreement. Elys has become the 100% owner of USB, which will continue to operate but as a wholly owned subsidiary of its new owner. Elys paid $12 million on the closing date in July, with 50 percent paid in cash and the other 50 percent in a little more than 1.25 million common shares of Elys. There are earnout provisions that could take the overall purchase price as high as $41.8 million by the end of 2025 if all performance targets are met.
About USB
USB launched in 2016 under the leadership of President Victor Salerno. With more than 40 years’ experience in sports betting, it is safe to say that anything Salerno does not know about the industry is not worth knowing. Over the years, he has managed business risk for more than 100 gambling properties and was inducted into the American Gaming Association‘s Gaming Hall of Fame in 2015, as well as the Sports Betting Community Hall of Fame last year.
Also on the management team are CEO Bob Kocienski, Director of Bookmaking Robert Walker and Director of Operations and Compliance John Salerno (son of Victor). Between them, they have a combined experience of 80 years in the business.
The US Supreme Court decision to strike down PASPA in 2018 had a profound and positive impact on USB, allowing it to expand its service offerings across casinos in New Mexico, Colorado and North Dakota. Earlier this year, USB entered into a further agreement in Washington DC, where the sports betting market is expected to open up by the end of 2021.
Mr Salerno Sr commented that becoming part of the Elys empire was a necessary step in order for USB to continue to grow and thrive. Ha said in a press statement that to increase market share, USB needed to be linked with a sportsbook platform that was specifically built for and tailored to the US market. He added: “We spent the last three years vetting virtually every sports betting technology in existence and determined that the Elys platform was superior to all the other platforms.”
A perfect fit
Elys Game Technology, meanwhile, has been experiencing monumental growth over the past year or so. Part of that has been organic, due to the evolving regulatory environment and shifting consumer patterns during the strange times in which we have recently been living. Also, Elys has grown through strategic merger and acquisition activity.
The business started out as Newgioco Group in the 1990s, and for two decades, was focused firmly on the Italian market. A change of name last year, however, was accompanied by a change in strategic focus and under a new management team, Elys has made vigorous strides in the US market. Last June, it launched the subsidiary business Elys Gameboard Technologies LLC, under which banner it is expanding across the US.
The USB acquisition will provide Elys with a ready-made sports betting presence across four US states – a presence that will be enhanced by the technology that Elys brings to the table. Michele Ciavarella is the Executive Chairman and interim CEO at Elys. In welcoming USB aboard, he commented: “We are highly optimistic that the addition of USB to our European expertise could accelerate our growth and product innovation, while solidifying a position at the forefront of our industry servicing large and small casino operators, as well as neighborhood establishments like restaurants and bars across the United States and Canada as regulations permit.”
An evolving market
Mr Ciavarella’s comment about regulations is a pertinent one. The “domino effect” of US states moving to legalize sports betting after their neighbors do so is something that seems certain to accelerate as states eagerly search for new sources of tax revenue to plug budget deficits.
Indeed, nine more have joined the party so far this year, and 2021 is little more than half way through. It’s an exciting market that is filled with possibilities. Elys and its new subsidiary are ideally placed to take full advantage.