Entain’s Expansion Comes Under Cloud of Future Regulation

British gambling group, Entain, has recently come to terms to purchase Israeli sports media company, 365scores.

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The FTSE 100 gambling conglomerate, which also owns Ladbrokes and Coral, has agreed to spend $150million (around £120million) for the firm with up to £8 million in potential contingent payments.

So what does the acquisition do to the landscapes of Entain and the online gambling industry more broadly both at home and abroad?

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Entain background

Simply put, Entain is the name behind Britain’s most iconic and well-known gambling brands. Ladbrokes, Coral, FoxyBingo, PartyPoker; all sit under the company’s banner.

The company splits its focus across two major gambling areas; sports betting and online casinos.

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Started in 2004 as Gaming VC Holdings, Entain’s success and size is in no small part down to the company’s track record for big money merger and acquisition activity.

A £1.1bn bwin acquisition in 2016 was followed by the 2017 purchase of Ladbrokes Coral for some £8bn. In 2021, it was the company itself that was the target of a $11bn buyout offer from its joint venture partner in the US, MGM Resorts, which was quickly turned down as an undervalued opportunity

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In total, the purchase brings the portfolio of Entain, which offers many other services in betting and gaming, touting their sportsbook offering and fast payment options at online casinos, to 32 online casino and sports betting brands.

Who is 365scores?

Started by four former Israeli special forces soldiers in 2012, the Tel-Aviv-based firm describes itself as the “fastest, most accurate online live scores service, serving over 100 million fans worldwide”.

Indeed, the company is ranked as one of the leading score update apps on the market and brings with it a huge portfolio of customer data and analytics that use the platform to monitor live score updates and insights on global sports ranging from football to hockey and basketball.

Why buy now?

Entain’s position in the top tier of the UK’s gambling scene is well-established, so to that end, adding another name to its portfolio makes total sense as a method of expansion.

In a statement alongside the news of the acquisition, the company said: “The combination of 365scores’ deep expertise in data-driven sports media content alongside Entain’s global scale and market leading platform capabilities will provide customers with a broader offering of interactive content and experiences.”

Speaking to This Is Money about the deal, Victoria Scholar, who heads up the investment team at Interactive Investment, said the deal broadened Entain’s portfolio outside of its typical space.

‘The sports betting and gaming industry is no stranger to inorganic growth, but [the 365scores] bolt-on is slightly different, pushing Entain into sports media content, underscoring the importance of data when it comes to targeting new audiences,” she said.

Clearly the company’s leadership sees 365scores as an valuable asset and, according to independent analysts at Shore Capital Markets, the acquisition marks the continuation of a buy-up strategy that has potential to pay strong dividends in the medium-term.

“It’s all about the exit growth rate,” analysts told financial publication, Proactive Investors.

The investment firm’s bullishness points to the likelihood that regulatory conversations currently cloud the significant betting markets of the Netherlands, Germany and, most importantly, the UK.

The latter is awaiting the imminent arrival of a gambling White Paper; a set of regulatory points enshrined into law that will likely alter the way gambling companies can advertise, market and operate their platforms for users in the country.

Recent Activity

It is this White Paper that will be of particular significance to Entain’s practice.

First, and not least, because of its sheer market size and the aggressive activity it has undertaken to reach it.

Last week’s purchase of 365scores marks the company’s tenth in the last 18 months, having most recently acquired software developer Sportsflare from Tidal Holdings for $13.25million in March.

Prior to that, it snapped up a £600m majority stake in Croatian sportsbook and gaming operator, Supersport, Latvian online casino operator, Klondaika and Polish sports betting provider, Totolotek, to name but a few.

Though no details have emerged around competition law for the White Paper, it is nevertheless an interesting consideration to note Entain’s highly-aggressive M&A strategy prior to UK regulation tightening.

Secondly, Entain was, until William Hill recently took the top spot with a £19m fine last month, the subject of the largest fine in the history of the UK’s gambling sector.

In August last year, the company was forced to hand over £17m for what the Gambling Commission saw as repeated failings to control customer overspending, including one case of a bettor depositing £230,845 over the course of 18 months. It was Entain’s second regulatory fine in three years, following a £5.9m payout for similar errors in 2019.

More significantly, it was noted that the multiple failings from Entain to regulate customer overspending came after it was revealed that the government would review gambling regulation back in 2020. As further punishment, the Gambling Commission forced the company to institute an “improvement plan” at the company to tighten up gambling addiction controls.

It is worth noting that the gambling commission has never revoked the license of a major betting operator in the UK, though the market’s biggest seems to be on thin ice.

Final Thoughts

If past is proof, Entain’s M&A activity will continue to beef up the company’s brand-count. And, with 365scores on board, the firm will hope to attract and retain new audiences to its gambling ecosystem through the use of sports media and live score offerings.

But all eyes of UK-based gambling operators will be firmly fixed on Westminster and the delivery of the forthcoming gambling White Paper.

Entain is expected to have shored up security and safeguarding for problem gamblers to align with the expected new regulatory framework and it will not want to fall foul to further financial penalties. The balancing act of expansion in the face of restriction in a tightly-run ship makes Entain a fascinating gambling case-study to follow in the short and medium-term.

The post Entain’s Expansion Comes Under Cloud of Future Regulation appeared first on iGaming.org.

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