Bet On It: Gambling.com to acquire Odds Holdings for $80M upfront

Welcome to the latest edition of “Bet On It,” where The Fly looks at news and activity in the sports betting and iGaming space.

SECTOR NEWS: Caesars (CZR) announced the closing of the previously announced sale of the Linq Promenade to a joint venture formed between TPG Real Estate (TPG) and the Investment Management Platform of Acadia Realty Trust for $275M . Concurrent with the closing of the transaction, Caesars made a $27M voluntary prepayment of our Term Loan B due 2030 with the proceeds from the transaction.

PlayAGS (AGS) announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the previously announced agreement for the Company to be acquired by affiliates of Brightstar Capital Partners for $12.50 per share in cash, The HSR Act waiting period expired at 11:59 p.m., Eastern Time, on December 9, 2024, satisfying an important condition necessary for the completion of the Proposed Transaction, which is expected to close in the second half of 2025, subject to other conditions and regulatory approvals.

Bragg Gaming (BRAG) announced insider share purchases. Bragg also emphasized that strategic growth and liquidity initiatives remain key priorities following the board’s strategic alternatives process conclusion. “The recent insider purchases by Bragg’s management and board underscore our confidence in the company’s near-term potential. We remain committed to creating shareholder value and liquidity opportunities over the next year through strategic transactions, or other value-enhancing initiatives. While the strategic review process has concluded, our dedication to pursuing these objectives heading into 2025 remains unchanged. Furthermore, the strategic review process provided invaluable insights into the key factors potential acquirers prioritize when crafting bids that accurately reflect our intrinsic value. We’ve identified key focus areas, such as stronger cash generation, increased revenue diversification, accelerated proprietary content growth, and enhanced margins. These are tangible, actionable targets that have been at the heart of our strategic initiatives, and we believe are achievable under our 2025 plan. The alignment between management’s insider purchases and our strategic roadmap demonstrates that we’re not just talking about value creation – we’re investing alongside our shareholders while actively pursuing paths to enhanced liquidity. While the formal review process has concluded, it has sharpened our focus on the metrics that matter most. These concrete objectives, combined with our ongoing commitment to explore opportunities that could provide meaningful liquidity events for our investors, strengthen our position. As insiders, we clearly see the potential to see this value realized in 2025.” Brag Gaming expects FY25 revenue to be up double digits. The company said, “Bragg is actively advancing a robust pipeline of opportunities that is anticipated to drive strong momentum as we enter 2025. The outlook for 2025 remains positive, with expectations of sustained double-digit top line growth, expanding bottom line margins, and increased operational leverage, further strengthening Bragg’s position in the market. Formal guidance is expected to be issued in early 2025.”

Super Group (SGHC) raised its FY24 adjusted EBITDA view to at least EUR 360M from EUR 345M. CEO, Neal Menashe commented: “I’m very proud of our performance this year and delighted we are in a position to raise our full-year revenue and ex-US Adjusted EBITDA guidance again while announcing another dividend for 2024. We have consistently said that we will consider returning excess cash to shareholders, and the outstanding performance of the business throughout 2024 alongside the continued strength of our balance sheet, has given us the platform to be able to do this. It has been a super year for Super Group and we look forward to building on this success as we move into 2025.” In light of the company’s performance, Super Group’s Board of Directors has declared a special cash dividend on its ordinary shares of 15c per share, payable on January 8, 2025 to shareholders of record as of the close of business on December 23. This dividend, combined with the initial 2024 dividend of 10c per share paid in July, takes the total shareholder dividend declared for 2024 to 25c per share. The company re-iterated its intention to begin paying a regular quarterly dividend, subject to Board approval, in 2025. Oppenheimer raised the firm’s price target on Super Group to $9 from $6 and keeps an Outperform rating on the shares. Super Group raised its 2024 EBITDA guidance by 4% on strong customer engagement in core markets that the firm sees reflecting a more consistent earnings compounder, the analyst tells investors in a research note. Declaring a special cash dividend signals solid visibility into 2025, and the firm forecasts margins expanding 100 basis points on a more favorable global regulatory environment, Oppenheimer says.

Gambling.com (GAMB) announced it entered into a definitive agreement to acquire Odds Holdings, the parent company of OddsJam. Under the terms of the agreement, Odds Holdings stockholders will receive initial consideration of $80M and may receive up to an additional $80M based on Odds Holdings’ business performance through the end of 2026. Gambling.com Group’s acquisition of Odds Holdings further expands the company’s online gambling industry footprint, adding complementary recurring revenue from new and existing users and partners. The initial $80M purchase consideration will be comprised of $70M in cash and $10M in Gambling.com Group ordinary shares. The company expects to fund the $70M cash payment from borrowings under the company’s expanded credit facility, as described below. In order to fully achieve the additional $80M in contingent consideration, adjusted EBITDA derived from the Odds Holdings assets needs to at least double for the full year 2026 period compared to 2024. Entirely at the company’s discretion, Gambling.com Group has the ability to settle up to 50% of any of the contingent consideration payments in the company’s ordinary shares. In conjunction with the transaction, the company entered into a debt financing commitment letter with Wells Fargo Bank, National Association and Wells Fargo Securities, which have committed to arrange and provide a senior secured term loan and revolving credit facility of at least $100M pursuant to an amendment to its existing credit agreement. Stifel elevated its price target on Gambling.com to $17 from $14 and keeps a Buy rating on the shares after the company announced an agreement to acquire Odds Holdings, parent company of OddsJam, a consumer facing, subscription fee platform that offers a variety of betting tools. While “still processing the deal and running industry checks,” the firm’s initial read is “highly constructive” given the belief that the deal aligns cleanly with Gambling’s strategic priorities while “still showing attractive financial accretion,” the analyst told investors.

NFL WEEK 14: Week 14 continued a recent NFL trend of heavily favored and publicly backed teams narrowly winning but failing to cover the spread, according to Canaccord. The Kansas City Chiefs exemplify this pattern, with a league-best 12-1 record but seven consecutive failures to cover. Underdogs covered the spread in eight games this week but managed to win only three outright. These near misses by large underdogs have limited sportsbooks’ recovery from a challenging October, with just three weeks of NFL action remaining in Q4 for operators to improve results. New York was the first state to report November sports betting results, showing total handle growth of 7% year-over-year to $2.27B and or GGR, surging 53% year-over-year to a record $232M. Engagement remained strong in the state, with Week 13 handle up 14% year-over-year to $556M, driven by the Thanksgiving holiday being earlier last year. This solid handle growth, combined with more favorable outcomes compared to last year, boosted weekly GGR by 55% year-over-year to $50M. DraftKings performed particularly well over Thanksgiving week, increasing its handle share by 350 basis points sequentially to 36%, edging slightly ahead of FanDuel. Fanatics showed the most significant year-over-year improvement, gaining 670 basis points to reach a 7.9% handle share. FanDuel maintained its leadership in New York by GGR share at 46%, followed by DraftKings at 32%.

Sweepstakes casinos are a fast-growing segment of online gaming that sits between social casino games and iGaming. Although the concept emerged in 2012, the industry has gained significant attention recently due to its impressive growth—around a 75% compound annual growth rate from 2019 to 2023—and its innovative use of sweepstakes promotions to operate outside traditional gambling regulations, Macquarie told investors in a research note. While regulatory scrutiny is expected to increase, the firm believes sweepstakes casinos are here to stay. Its projected growth of approximately 30% aligns closely with that of the broader iGaming industry. Sweepstakes gaming combines social casino gameplay with opportunities for users to win real money through a sweepstakes model. This mechanism, presented as a promotional tool to incentivize virtual currency purchases, enables these platforms to operate legally in most U.S. states. With real-money iGaming accessible in only seven states, sweepstakes casinos position themselves as the only legal avenue to win real money in much of the country. This growth reflects strong demand for iGaming in the U.S., which remains unmet by limited state legalization, according to Macquarie. Sweepstakes gaming may support iGaming legalization by highlighting untapped tax revenue opportunities. Cannibalization may be more likely between sweepstakes and social casinos, as both cater to overlapping audiences. The future of sweepstakes gaming appears secure for now. The firm contends that the ultimate fate of sweepstakes casinos will depend on whether states categorize them as legitimate sweepstakes or gambling, given their similarity to traditional gambling products. However, ongoing lawsuits against sweepstakes casinos could present future challenges.

PROMOS & PARLAYS: The promotional environment during the early stages of the NFL season has remained rational, Jefferies told investors. Data from six states reporting free bet activity for September and October indicates that total free bet spending as a percentage of handle declined slightly, down 0.1 percentage points year-over-year to 5%. All major operators reduced their free bet spend relative to handle: FanDuel decreased by 0.3 points to 4.3%, DraftKings (DKNG) by 0.1 points to 4.9%, and BetMGM (MGM) by 1.6 points to 4.7%. October’s weak sports margins, amplified by parlays, illustrate the compounding impact of unfavorable outcomes, according to the firm. While the broader market rebounded in November, data from Oregon highlights the volatility driven by parlays. In October, gross gaming revenue, or GGR, margins dropped sharply due to what DraftKings described as “the most customer-friendly stretch of NFL outcomes we have ever seen.” Oregon followed this trend, with headline margins declining 4.9 points and GGR falling 33%. Notably, single-bet margins only dipped by 0.8 points, but parlay margins plummeted by 14.3 points due to multiple unfavorable results within combination bets. As a result, GGR from single bets in Oregon was relatively stable, down just 5% year-over-year, while the headline 33% GGR decline was almost entirely driven by a 51% drop in parlay GGR. Despite these challenges, parlay margins during this unfavorable period matched the peak margins of single bets over the last 12 months. Jefferies concluded that this suggests that while operators with higher parlay penetration may experience greater volatility during margin weakness, their underlying margins remain stronger than those of operators with lower parlay penetration.

ADDITIONAL ANALYST COMMENTARY: Citi raised the firm’s price target on Entain (GMVHF) to 1,050 GBp from 1,000 GBp and keeps a Buy rating on the shares.

Barclays lowered its price target on MGM Resorts to $46 from $50 and keeps an Overweight rating on the shares as part of a 2025 outlook for the U.S. gaming, lodging and leisure group. A “re-energized consumer” and relative lack of tariff exposure favors travel and experiences businesses in 2025, the analyst tells investors in a research note. The firm says lodging stocks “appear overly optimistic,” gaming has been left behind, and cruise “still has some fuel left in the bunker.” Barclays thinks the cruise recovery is in its “6th or 7th inning” and expects another year of share outperformance in 2025. Digital gaming remains one of its favorite sectors.

Barclays increased its price target on Las Vegas Sands (LVS) to $61 from $58 and reiterated an Overweight rating on the shares as part of a 2025 outlook for the U.S. gaming, lodging and leisure group. A “re-energized consumer” and relative lack of tariff exposure favors travel and experiences businesses in 2025, the analyst told investors in a research note. The firm said lodging stocks “appear overly optimistic,” gaming has been left behind, and cruise “still has some fuel left in the bunker.” Barclays thinks the cruise recovery is in its “6th or 7th inning” and expects another year of share outperformance in 2025. Digital gaming remains one of its favorite sectors.

Barclays cut the firm’s price target on Caesars to $55 from $57 and maintained an Overweight rating on the shares as part of a 2025 outlook for the U.S. gaming, lodging and leisure group. A “re-energized consumer” and relative lack of tariff exposure favors travel and experiences businesses in 2025, the analyst tells investors in a research note. The firm says lodging stocks “appear overly optimistic,” gaming has been left behind, and cruise “still has some fuel left in the bunker.” Barclays thinks the cruise recovery is in its “6th or 7th inning” and expects another year of share outperformance in 2025. Digital gaming remains one of its favorite sectors.

JPMorgan upgraded Gaming and Leisure Properties (GLPI) to Overweight from Neutral with a price target of $54, up from $49. The upgrade comes given recent year-to-date share price underperformance, a safe and healthy dividend yield, built-in growth from rent escalators and recent/pending M&A driven growth, providing for attractive visibility, and a predictable business model with far less volatility compared to lodging REITs or Gaming OpCos, the analyst commented. The firm also can’t help but think that a lower interest rate environment will lead to incremental M&A.

JPMorgan also upgraded Penn Entertainment (PENN) to Overweight from Neutral with a $27 price target. The firm presently sees a favorable risk-reward, with sightline to a bottoming of its regional land-based-casino cashflow generation, with a path to aggregate growth. In addition, the firm sees reasonably set expectations for near-term Interactive losses for Q4 and 2025 with buy-side expectations for modestly positive EBITDA generation in 2026.

Macquarie initiated coverage of Flutter Entertainment (FLUT) with an Outperform rating and $340 price target. Flutter is a rare large-cap stock in the gaming, lodging, and leisure sector that meets software’s “Rule of 40,” but the stock “does not trade like one,” the analyst said. The firm sees a “clear line of path” annual 12% revenue growth and 21% EBITDA growth through 2030, fueled by an “unrivaled” serviceable addressable market and market share gains.

PUBLICLY TRADED COMPANIES IN THE SPACE INCLUDE: Accel Entertainment (ACEL), Bally’s (BALY), Boyd Gaming (BYD), Caesars (CZR), Churchill Downs (CHDN), DraftKings (DKNG), Flutter Entertainment (FLUT), Gambling.com (GAMB), Gan Limited (GAN), Genius Sports (GENI), Las Vegas Sands (LVS), MGM Resorts (MGM), Penn Entertainment (PENN), Rush Street Interactive (RSI), Super Group (SGHC) and Wynn Resorts (WYNN).