What could the future hold for Kambi and OpenBet as platform consolidation slows?  

In September a rumour that Genius Sports was eyeing a takeover of Kambi Group surfaced, resulting in both parties publicly dismissing the suggestion of ongoing talks. The chatter caused both share prices to dip briefly as the market considered what such a deal might look like.  

One source at the time told iGB it wasn’t a good time for Kambi to get caught up in a buyout as it was navigating a transition period and ushering in new CEO Werner Becher. But analysts at Swedish investment bank ABG Sundal Collier have suggested that Kambi has been up for sale for a while.  

When MGM announced on 24 June that it was acquiring Tipico’s US betting platform to help it move into Brazil and bring its LeoVegas European betting offering onto an in-house tech stack, ABG Sundal Collier analysts admitted they thought MGM had its eyes on Kambi.  

“MGM was a potential buyer in our view, as well as others that have now already acquired or built a sportsbook solution,” they wrote in a June-dated note.  

The bank seemingly holds out hope for a Kambi sale, as the note also stated: “interest should remain in acquiring Kambi’s well-invested tech at a significantly higher price than Kambi’s EV (enterprise value), especially a few years out.” ABG Sundal Collier puts Kambi’s EV at €153m. The bank assigns Kambi a buy rating, claiming its tech stack is “the [industry’s] most renowned one.” 

The era of largescale B2B consolidation is over  

However, another source calls the ABG analyst “naive” for expecting an operator to snap up Kambi in its current form. “MGM sees the [Tipico purchase] as a technology deal, and it makes more sense because Tipico hasn’t got any other incumbent business attached,” they told iGB.  

“The price probably reflected that. If I’m an operator and I buy Kambi I’ll be paying a multiple of revenue for all of the operators that have contracts they won’t be able to get out of. They would probably end up wiping out almost all that revenue.” 

While Kambi has categorically denied that it’s looking for a buyer, fellow betting platform provider OpenBet is openly for sale after its owner Endeavour said in August it didn’t fit in with the entertainment company’s future strategy.  

The great operator/betting platform insourcing era is very much over, the M&A adviser suggests. The era of DraftKings/SBTech-sized deals is truly behind us as most operators are not in a position today to acquire large B2B businesses with many clunky components. 

“That was a merger of convenience to get the listing away,” the source says of DraftKings’ €590m deal to acquire SBTech via a reverse merger company in April 2020. The deal was a roundabout way to help DraftKings go public in the US via the special purpose acquisition company Diamond Eagle Acquisition Corp. 

“[DraftKings] essentially had to shed all the B2B business which was hard work as they only wanted the technology,” says Matt Howard, partner at product and development consultancy Propus Partners, of the deal. “It was a speed to market thing, and it worked for them.”  

“There are other places to buy the technology from”

But in today’s market buying a well-established B2B business for the sake of insourcing its technology is a challenging and hugely expensive endeavour that most operators can’t afford. “If operators are insourcing, they’ve done it by now,” says the source. Howard agrees: “I think it’s difficult for operators to see that many benefits from [acquiring a large supplier]. If they only want the technology there are other places they can buy it.”

Betting supplier deals seemed to have reached their peak in 2021 during the height of the US’ online betting investment gold rush. PointsBet acquired Banach Technology in a $43 million transaction on 15 March 2021 and Bally’s closed its own $125 million acquisition of Vegas-based betting platform Bet.Works on 1 June 2021. Notably, both operators have since been acquired by larger operators and the state of these technologies is unknown.  

What could an ideal buyer look like?  

More recent operator supplier deals have been much smaller and more specialised. One example is DraftKings acquiring both in-play betting specialist Simplebet and machine learning-powered tech start-up Sports IQ Analytics earlier this year for undisclosed sums.  

“There’s still lots of investment going on but it’s at a smaller scale from what I can see. More recent deals seem to be [operators] taking a shot on something smaller and fast-growing, rather than trying to take on something huge with other operators as clients,” says Howard.  

Jordan Pascasio, principal for US investment vehicle Sharp Alpha agrees. “As straight bets deliver flat margins, operators are increasingly prioritising high-margin, high-engagement products like same game parlays (SGPs) and in-game, which offer greater entertainment value and profitability,” he explains.  

“I think it’s difficult for operators to see that many benefits from [acquiring a large supplier]. If they only want the technology there are other places they can buy it.”

Matt howard, partner, propus Partners

If firms are looking for a buyer to take on the entire business as-is, Howard believes private equity could be their best option as firms have much deeper pockets than operators. “If you rule out operators, the most likely buyer is private equity,” he relays. Kambi and OpenBet are both regulated market-facing and largely profitable businesses, two key criteria for a PE buyer. 

The sector has witnessed a recent slew of PE-driven deals. Apollo Global Management announced it was acquiring suppliers IGT and Everi Holdings in a $6.3 billion deal in the summer, while hedge fund Standard General (SG) completed its purchase of Bally’s Corporation in July. As gaming stocks have experienced depressed valuations over the last year, many have sought out private investment. 

Ushering in a new era 

Although Kambi categorically denies that it is up for sale, the company is in the midst of a substantial turnaround, having brought in its new CEO in July. Werner Becher has no history of M&A in his gambling industry career, although he did establish a consulting business in 2003 that was subsequently sold in 2009. 

Prior to joining Kambi, Becher most recently served as CEO for EMEA and LatAm at Sportradar. Before this he sat at the helm of Interwetten for seven years between November 2011 and December 2018. ABG Sundal Collier expects the market will appreciate a more commercially focused CEO, “rather than the strongly product-focused CEO we saw in Kristian Nylén, who has a track record of losing important clients to in-house solutions,” it said in its June note.  

Previous CEO and co-founder Nylén said he was not satisfied with the supplier’s financial performance during its 2023 full year results announcement. Despite Kambi posting a year-on-year increase in revenue, it was hit with the loss of a major client as Penn Entertainment shifted onto its own tech stack.  

Kambi’s earnings will take an additional hit when MGM eventually drops Kambi’s tech upon integrating Tipico’s platform. But the opening of Brazil’s licensed betting market in January 2025 could be Kambi and OpenBet’s saving grace, offering new streams of revenue and a wider scope of potential clients.  

Bom dia Brazil  

Kambi has signed on to power local brand KTO’s sportsbook with its turnkey solution, while OpenBet has platform deals in place with local television and media giant Grupo Silvio Santos and Bell Ventures Digital to deliver their respective online betting products.  

“There’s a view that some of these big [suppliers] are so embedded in the sector but they’re not really growing anymore,” says the adviser. “OpenBet has gone and reinvented itself and as Brazil becomes a regulated market, the OpenBets and Kambis of this world, who only work in regulated markets, will be first in line to pick up those customers.” 

Moving into the licensed market during its infancy will no doubt build trust among local operators, particularly considering the well-known names in betting and media that are already working with the suppliers.  

In response to questions from iGB, a Kambi spokesperson said KTO was a fast-growing operator boasting an extensive customer database and real ambition to build on its market share in Brazil.  

Similarly, OpenBet CEO Jordan Levin said its deal with Grupo Silvio Santos highlights the strong demand of its end-to-end ecosystem to Brazilian operators.  

Splitting up the stack  

Ultimately Sharp Alpha’s Pascasio is optimistic about the state of supplier M&A in the sector and expects the current trend of smaller, specialist technology acquisitions to continue. “Particularly in high-demand areas like in-play, same-game parlays (SGPs) and managed trading services,” Pascasio tells iGB. 

“This trend extends beyond operators to include leading technology suppliers themselves. And as operators see improved profitability and faster reinvestment cycles, suppliers that facilitate these efficiencies and drive margin accretion are well-positioned for acquisition.” 

Considering this trend, perhaps these multifaceted suppliers could look to sell off individual parts of their technologies. “Selling their in-house products separately makes sense, if possible ” Howard says. In Kambi’s case that could be its Bet Builder and odds feed offerings.  

He also points at Kambi’s 2022 acquisition of frontend specialist Shape Games in helping to differentiate its offering. “Giving clients the opportunity within the wider group to build their own differentiated frontend certainly helps to make them a more interesting business.”