Pulse
CONSOLIDATIONS AND MERGERS BRAGG GAMING & SPIN GAMES
It’s no coincidence that in Europe we’re witnessing a huge consolidation spree with the big continuing to get bigger due to the synergies of combined technology and marketing across larger entities. The consolidation is also defensive, driven by stricter regulation that has reduced margins and made it tougher to operate within this environment. ROI is declining, which is driving consolidation to extract cost and increase revenue synergies.
personal perspective, there’s a lot of capital in the stock.
Richard, we're seeing massive consolidations, not only in the gaming industry, but across the content spectrum. What's driving the expansion in gaming and where does Bragg fit into the big global consolidated picture?
Te picture is the same across all quoted entities as they’re driven by shareholders to increase margins and profitability though growth. M&A theoretically ticks those boxes, although a lot of M&A is not necessarily as accretive as many initially expect. I think there is a lot of money on the sidelines right now with many boards being pushed to complete deals. In the gaming space the key driver is scale, which is king in this business.
It’s no coincidence that in Europe we’re witnessing a huge consolidation spree with the big continuing to get bigger due to the synergies of combined technology and marketing across larger entities. Te consolidation is also defensive, driven by stricter regulation that has reduced margins and made it tougher to operate within this environment. ROI is declining, which is driving consolidation to extract cost and increase revenue synergies.
We are still in the early days of market expansion in the US, but material consolidation in the sports betting industry is expected over the next 24 months. Te guys in the lower echelons in the US are not going to be able to survive on their current marketshare, which will lead to consolidation at the bottom. Tere is also the driver of vertical integration, as we saw with SBTech and DraftKings, which made a lot of sense. Why pay a third-party betting supplier when you can bring that resource in- house?
I also think some of the other big operators, such as Penn, will seek to invest in platforms and eventually look to create their own sportsbook. I think this type of activity will continue from a strategic sports betting perspective. And from a casino perspective, there is clearly a lot of value for a business to be vertically integrated. Owning the content, the
distribution and player integration tools is a massive benefit. I think if we can add premium content into our vertically integrated business there is a lot of value we can add to the operators. We will continue to see, over the next 12 to 24 months, many casino content deals being announced, and that trend will continue in the near to medium term.
Richard, what's next for Bragg?
Kent and his team have been investing and ramping up Spin’s in-house content provision and as we get to the end of this year, from a proprietary games perspective, we will have a run-rate of 12-18 games on the Oryx side too.
I’m looking to hire game designers who can utilise our existing technology to deliver monthly game content, so that when we have this conversation in 12 months’ time, we’d be discussing a run-rate of 24-30 games per year, which is quite material. In two years I’d estimate an Oryx run-rate of 30-40 games per year and Spin in the US won’t be too dissimilar. An in-house developed content business, combined with exclusive third-party content and an essential third-pillar, an aggregation business with bespoke tournament and player engagement, leaderboards, progressive jackpot tools etc., creates a very compelling offering.
Is that a global outlook?
We are concentrating on the core markets of the US, Canada, the UK, Germany and key countries in Europe. And both Kent and myself think there is a good opportunity in LatAm with US-style content. I expect, depending on how regulation shakes out, we will add LatAm markets, giving us seven to eight core markets with a long-tail to see how things unfold.
Kent - How far off is Bragg's ambition to become a Tier 1 vertically integrated iGaming business in the US? What additional pieces are needed to complete the puzzle?
If you start at the front-end with the operators, we have a tick in the box due to our integrations as one of the first into the market. We were fortunate to conclude all the PAM and RGS
NEWSWIRE / INTERACTIVE / MARKET DATA P73
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