Posted on: May 28, 2024, 01:28h.
Last updated on: May 28, 2024, 01:28h.
DraftKings (NASDAQ: DKNG) is said to be close to acquiring micro-betting provider Simplebet in a transaction that could value the target at $120 million to $170 million.
Earnings + More broke the news, citing unidentified sources familiar with the matter. As of yet, neither DraftKings nor Simplebet have confirmed takeover talks. The two companies have history. In 2021, they inked a deal in which Simplebet provided micro-betting services to DraftKings Sportsbook. Today, the prospective suitor is the rumored target’s largest client.
Micro-betting is an emerging derivative of in-game or live betting – areas operators are pushing into in an effort to boost handle and drive fan engagement. Whereas a traditional in-game bet might revolve around scenarios such as a baseball team scoring in their half inning, or other game-specific situations (point spreads, totals, etc.), the micro-betting concept offered by Simplebet goes even further.
Assuming Simplebet sells itself for $170 million that implies a significant discount to its $210 valuation following a 2021 Series C funding round valued at $28.6 million.
DraftKings on Buying Spree
Rumors that DraftKings is mulling a takeover of Simplebet arrived about two weeks after the former announced a deal for Sports IQ Analytics — a provider of analytics and data used by sportsbook operators to formulate odds for player prop bets.
Terms of that deal weren’t disclosed, but it’s believed to be in the $50 million to $70 million range. When adding the possible $70 million paid for Sports IQ Analytics to $170 million (potentially) for Simplebet, that implies DraftKings will have shelled out nearly $1 billion on acquisitions since the start of 2024 when factoring in the $750 million the operator paid for internet lottery provider Jackpocket. That was a cash and equity deal.
Providers of specialized odds, such as Simplebet and Sports IQ Analytics, have been favored targets of sportsbook operators over the past several years. Such transactions include PointsBet doling out $43 million for Banach Technology in 2021. PointsBet US was later acquired by Fanatics and operates under that brand.
Last year, Entain Plc (OTC: GMVHY), which controls half of BetMGM, paid $266 million in cash for sports analytics provider Angstrom Sports.
Why Simplebet Makes Sense for DraftKings
Simplebet products allow sportsbook clients to wager on in-game events, including balls and strikes in a baseball game. Seizing upon bettors’ desire for instant gratification, in-game micro-betting is appealing to gaming companies because it’s a high-margin segment.
Micro-betting is also technology-centric and it’s often more efficient for sportsbook firms to acquire to this effect rather than building the technology in-house.
Other Simplebet clients include Bet365, ESPN Bet, FanDuel, and Hard Rock Sportsbook, according to the company’s website.
