Gain Exclusive Insights and Expectations for iGaming M&As in 2024
Expectations for iGaming M&As in 2024
Mark O’Sullivan, head of M&A at Exacta Solutions, recently caught up with Tim Poole of The Huddle on their podcast, Gambling Insider, to share exclusive insights into the world of Mergers and Acquisitions in the iGaming industry.
They reflected on the key developments during 2023 and offered some insights into what is expected for 2024. Several key trends, challenges, and expectations were explored, each of which is expected to shape the M&A landscape in the iGaming sector.
Billion-dollar deals slump
The iGaming M&A landscape has experienced its fair share of peaks and throughs in recent years. Notably, the pandemic’s influence redirected attention from sports betting to the casino sector, sparking a wave of aggressive deals. That said, activity dipped and the online gambling sector hasn’t completely recovered in terms of M&A, and particularly, investments. Despite a recent upward surge in M&A deals, 2023 witnessed something of a decline in frequency and deal sizes. However, the year still boasted a number of significant transactions, such as Aristocrat’s $1.8 billion acquisition of NeoGames and Lottomatica’s €639m bid for SKS365. Most are of the view that there is some major M&A activity poised for 2024 and a revival of the much-quietened iGaming investment space.
SPACS a thing of the past?
The once-prominent trend of Special Purpose Acquisition Companies (SPACs) in iGaming M&A appears to have faded into the background, marking a significant shift in the ease of access to early capital. Regulatory uncertainties and heightened scrutiny surrounding SPACs have raised concerns among investors and industry players. The intricate process of taking a company public via SPACs, coupled with the challenges of meeting the expectations set during these transactions, has led to something of a re-evaluation. As a result, companies are opting for more traditional routes, seeking stability and predictability in their capital endeavours.
Economic challenges causing M&A caution
A number of persistent challenges have arisen in recent years, which continue to have an impact on the decision-making process in the M&A space. The enduring impact of COVID-19 still lingers, not least in the increased debt that was taken into the sector to survive, prompting a more cautious approach of late. Moreover, the looming signs of a recession contribute to the complexity, with increasing interest rates making capital more expensive for acquiring companies and less enticing for investors. This economic backdrop is creating a notable disparity between the desired multiples of those raising capital or sellers and what buyers or investors are willing to pay. It remains to be seen whether recession fears will pass, which in all likelihood will ignite a phase of rapid, mega M&A activity.
Focus on emerging iGaming jurisdictions
Competition is rife in Europe and regulators are better resourced than ever before. Dot-com licences are posing limitations that are requiring operators to be more selective in targeting the jurisdictions in which they plan to grow. Many have cast a wide net on the lucrative but murky regulatory waters of Latin America. Brazil is an obvious example of the issue with that kind of approach, given the shoe-horned high tax rates, clearly aimed at a consolidated market with only the giants being able to compete in a sustainable manner in the long term.
M&A expectations for 2024
Looking ahead to possible M&A trends in 2024, there’s a promising resurgence of social-driven products in both sports betting and casino. One standout is Dabble in Australia, which has been creating a buzz in the industry by seamlessly integrating a highly social and engaging dimension into a generally tired betting product offering. Time will tell if trends like Telegram casinos will last, but they have certainly lit a fire when it comes to player signup processes and speeds. Perhaps this will force operators to reconsider the often cumbersome entry process in many markets. These evolving trends reflect a shift towards enhanced user engagement and greater levels of accessibility, illustrating a growing preference for interactive and streamlined experience.
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