There’s a projected $94 Billion market quietly building under the surface.
But Morgan Stanley may have finally brought online gambling to the limelight, calling it a mega-trend they expect to reach new heights in the post-pandemic world.
Projected by some analysts to grow to $94 billion over the next few years, this could be the most exciting opportunity on the market for early investors.
And there’s at least one company quickly making a name for itself ahead of the growing wave of investment.
FansUnite (CSE:FANS; OTCMKTS:FUNFF) is a sports and entertainment company that has been active in the gaming industry since 2014, going public on the Canadian Securities Exchange (“CSE”) earlier this year.
Behind an impressive team led by industry veterans, they managed to navigate the waters of building their tech, while also pursuing a public listing on the CSE.
They’re only getting started, according to their announced plans. For years, many other companies have catapulted their growth, becoming multi-million and even billion-dollar companies, through the proven strategy of mergers and acquisitions.
This strategy found another success story earlier this year with the $3.3 billion merger between DraftKings (NASDAQ:DKNG) and sportsbook technology company, SBTech. Since then, DraftKings has seen its shares jump up 149%.
Now, FansUnite is planning on following a similar path.
Earlier this year, they acquired McBookie, an established bookmaker from the U.K. with approximately 10,000 active users and $100 million wagered over the last 3 years.
But now they’ve eyed what could be their biggest move to date.
With the esports industry pulling in $1.1 billion in 2019, up over 26% year over year and growing fast, FansUnite decided they didn’t want to wait any longer to get in on eSports.
The industry growth is one reason why their signed merger agreement with another superstar in this booming industry, Askott Entertainment, is such an exciting development.
Together, FansUnite and Askott will have 4 unique gambling platforms that have handled over $350 million in wagers and boast a combined 300,000 users.
Add to that their 4 major contracts allowing bookmakers to use their software to develop their own sports betting platforms, and you’ll see why this small Canadian company could be a gambling titan in the making.
1 - Booming Market Opportunity
The global online gambling market expected to grow at a compound annual growth rate of 11.5% over the next 7 years, there’s an incredible opportunity building for quality companies in the online gambling market.
Even in the midst of the pandemic, with casinos and small businesses around the world being shuttered, the online industry posted incredible numbers.
The 4 U.S. states with legal online poker sites - New Jersey, Nevada, Delaware, and Pennsylvania - reported record numbers in the month of March. New Jersey alone took in $3.6 million in revenue, up over 90% from 2019.
But that trend isn’t slowing down anytime soon. As businesses open again and the expected legalization of online gambling continues to sweep the nation, one state after another, this industry could be a top money-maker - both for businesses and early investors in the successful companies.
2 - An Experienced Leadership Team
With the team of all-stars FansUnite has at the helm, they’ve proven they have both the smarts and the experience to drive growth over the coming months.
Their CEO and CFO are both chartered public accountants, and their COO is an attorney well-versed in the art of international mergers and acquisitions.
Their CEO was even named one of Canada’s top 150 Entrepreneurs, but their C-suite aren’t the only ones with impressive credentials onboard.
Because they’ve recently brought on board members with decades of online gaming industry experience, including executive roles at companies such as PaddyPower Betfair.
Mr. Saxon Shadforth, a leading gaming executive, also joined as a director on their board earlier this year. With over 15 years of online gambling experience, he’s worked with several of the top names in the market across North America, Latin America, Asia, and Europe.
His experience and connections in the industry should be an incredible asset to the FansUnite team.
FansUnite (CSE:FANS; OTCMKTS:FUNFF) has already grown their business in both North America and Europe but given the experience and connections their team brings to the table, it’s safe to say they have much bigger plans for the future.
3 - Using A Tried-And-True Growth Strategy
With a few multi-billion-dollar companies sitting on top of the online gambling space, it can be a challenge for smaller players to grab market share while building slowly.
Which is why many sportsbook companies have used mergers and acquisitions to strategically grow and capture a bigger piece of this predicted $94 Billion pie.
This proven strategy has helped several major players leverage other companies’ relationships and business contracts to spread their platform like wildfire.
Plus, it’s a smart move in leveraging licenses to do business in different states and even different countries, opening up a growing user base and bringing the platform worldwide.
It’s a tried-and-true growth strategy that has helped vault some of the biggest names in the industry to the top, and they’re still following it to a T.
- DraftKings (NASDAQ:DKNG) merged with SBTech earlier this year, watching their stock jump up to 149% since then.
- The Stars Group has seen their stock more than double since March, recently completing a $12.2 billion merger with Ireland-based Flutter
- Penn National Gaming (NASDAQ:PENN) acquired Barstool Sports in a $450 million deal this year, now sitting at a massive $4.5 billion market cap.
And now they’re doubling down on this strategy, with the announcement that they’ll be merging with Askott Entertainment, an award-winning gambling software company in the coming weeks.
As FansUnite continues down this road, they’re aiming to become a major force both inside and outside North America. Before long, they could be the largest sportsbook company in Canada, poised to move into the multi-billion-dollar U.S. market.
4 - Multiple Streams of Income
FansUnite (CSE:FANS; OTCMKTS:FUNFF) has used mergers and acquisitions to grow their brand across North America and Europe, but they’re also using multiple platforms to bring in revenue from around the world.
While most companies are only bringing in revenue from the customers on their own website, FansUnite has found another way to leverage their assets.
Not only is FansUnite getting ready to launch their own website to generate revenue from their users, they’re also looking to sell their software to other sportsbooks, which would bring in revenue from users on third party sites as well.
By providing their online gambling software to other sportsbooks, they can gain valuable revenue from the three-pronged approach of an upfront onboarding charge, as well as a monthly fee and a percentage of the cut for all house wagers each month.
So not only are they able to grow their platform through their own sportsbook, they’re also poised to grow exponentially as more and more competitors use their software, turning competitors into customers.
Their unique platform addresses a major transparency issue for most regulators and saves bookkeepers money in the process, so it’s probably a no-brainer for many online gambling sites to partner up with FansUnite.
5 - Expanding to New Verticals
With the merger with Askott Entertainment, they’re also gaining an established partner in the esports industry.
The esports trend has gained a lot of steam in recent years, and it appears to have reached a tipping point.
The industry now has professional esports leagues, mass media attention, and multi-million-dollar sponsorships for players.
Plus, this has vaulted onto the mainstage this year as millions of people have embraced esports for entertainment while sports leagues around the world pressed pause during the pandemic.
Source: Askott Entertainment
With esports now reaching over 307 million viewers, FansUnite has jumped on an incredible opportunity to branch out and grab hold of this growing industry.
Thanks to their forward-thinking leadership, they aren’t just planning on leveraging their own platform to build revenue, they’ve also planned to capitalize on opportunities to drive revenue in a number of growing verticals.
The Next Titan in this Future $94 Billion Market?
The writing is on the wall. With more and more states legalizing online gambling, this projected Future $94 Billion market is just getting started.
FansUnite has found themselves in an incredible position, acquiring and merging with key pieces that are designed to make them a force to be reckoned with in Canada - and maybe soon, around the world.
Other companies to keep an eye on:
AT&T’s (NYSE:T) acquisition of Time Warner Inc has launched the telecoms giant squarely into the esports arena. That $85-billion mega merger brought things like ELeague and Rooster Teeth into the AT&T fold.ELeague is part of Turner Sports, a subsidiary of AT&T’s WarnerMedia, which televises its major events.
Nintendo even has a partnership with Eleague to broadcast The Nintendo World Championships on CBS, and Eleague hosts a lineup of other popular competitive games including Rocket League, Counter-Strike: Global Offensive, Street Fighter V, and Overwatch.
Alibaba (NYSE:BABA) is quickly becoming one of the world’s hottest companies thanks to its innovative approach to technology. It offers investors the full package; exposure to the rapidly developing fintech universe, cloud computing and AI space, e-commerce and retail, and of course, gaming.
Alibaba is even exploring the esports realm. According to Alibaba global esports director Jason Fung, "Alibaba has given us a five-year time frame to figure out what works in esports and to seek out business models that make sense. We've had that time frame to start becoming profitable and break even."
Brookfield Business Partners (NYSE:BBU, TSX:BBU.UN) is a top-notch business acquisition firm with a tremendous focus on success and the creation of shareholder value. The company’s experienced leadership has led to incredible deals over the years, including a profitable partnership with Great Canadian Gaming.
The partnership with Great Canadian Gaming allowed the pair to purchase an array of gaming assets in the Greater Toronto Area at a price of C$170. Together, the two companies aim to improve the value of these assets as well as bolster the customer experience with new offerings and expansions of acquired properties.
Stars Group Inc (NASDAQ:TSG, TSX:TSGI) is a world leader in the online and mobile gaming industry. With a focus on maintaining high regulatory standards while simultaneously offering a wide range of products across multiple platforms, Stars has solidified its place among the gaming hierarchy.
In December, Stars Group secured a major partnership with the National Basketball Association in order to use data and league marks across their digital sports betting offerings.
Scott Kaufman-Ross , Head of Fantasy & Gaming, NBA explained, "This dynamic partnership will be another way to create authentic fan engagement with league logos and official NBA betting data, while leveraging Stars' global expertise to further optimize the fan experience.
Great Canadian Gaming Corp. (OTCMKTS:GCGMF, TSX:GC) has made a name for itself over the past 36 years. It has built a dynasty in Canada and the United States with properties located across the continent. The gaming industry leader has built its reputation and following on integrity, service, and through the support of the communities surrounding it.
Given its recent earnings reports, GC has been labeled as undervalued by many investors, and key indicators suggest the same, especially with a new gambling boom set to explode in North America right around the corner.
Enthusiast Gaming (TSX:EGLX.V) is one of the most impressive video game communities on the web. Thanks to it’s aggressive acquisition strategy, it has a web of over 80 websites reaching more than 150 million people every month. It is also making significant moves in the esports arena, hosting wildly attended events in Canada, including the country’s largest gaming expo EGLX. Enthusiast also leverages its reach to provide advertisers with unique solutions across a wide array of publishers.
ePlay Digital Inc. (CSE:EPY) creates technology that helps TV networks, esports teams and leagues and even venues cut through the noise to reach their target audience. The company brings together multiple platforms to create engagement across social media, traditional media, streaming, and more. With a team built from sports, esports, and gaming experts, ePlay knows the video game industry inside and out. That’s why they’ve secured partnerships with companies including Time Warner Cable, ESPN, Sony Pictures, AXS TV, Intel, AXN, Fiat, CBS, Cineplex, and others.
By. Rashmi Bandara
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
FORWARD-LOOKING STATEMENTS: Certain information contained herein may constitute "forward-looking information" under Canadian securities legislation. Forward-looking statements may include, without limitation, statements relating to future outlook and anticipated events, such as the satisfaction of the conditions precedent and subsequent consummation of the Askott transaction; realizing FansUnite’s plans regarding expanded consumer base, business base, offerings and gaming licenses; that Saxon Shadforth’s contacts and experience will be a major asset; the growth of the online gambling market; its plan to grow by acquisition; the combined companies’ ability to scale their platforms, to enter into new and emerging international gaming markets, to capture the growing demand of gamblers and to become a global gaming leader; the strengths, characteristics and potential of the combined company; the company’s ability to become one of Canada's leading gaming companies; the ability to launch a proprietary sportsbook as well as selling software to other sports books; and discussion of future plans, projections, objectives, estimates and forecasts and the timing related thereto. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of FansUnite to be materially different from those expressed or implied by such forward-looking statements. Matters that may affect the outcome of these forward looking statements include that online gaming may not turn out to have as large a market, grow as quickly or be as lucrative as currently predicted; FANS may not be able to offer a competitive product or scale up as thought because of consumer tastes for its online product, lack of capital, lack of facilities, regulatory compliance requirements or lack of suitable employees or contacts; Mr. Shadforth’s experience and contacts may not result in material benefits; FANS’s intellectual property rights applications may not be granted and even if granted, may not adequately protect FANS’ intellectual property rights; risk factors for the online sports gaming industry in general also affect FANS including without limitation the following: competitors may offer better terms to potential M&A acquisition targets, or no such target may actually be acquired even if agreements are signed; competitors may offer better online gaming products luring away FANS’s customers; technology changes rapidly in the gaming and esports business and if FANS fails to anticipate or successfully implement new technologies or adopt new business strategies, technologies or methods, the quality, timeliness and competitiveness of its products and services may suffer; FANS may experience security breaches and cyber threats; regulators may impose significant hurdles to online gaming companies; FANS may not receive applied for gaming licenses; FANS’s business could be adversely affected if consumer protection, data privacy and security practices are not adequate, or perceived as being inadequate, to prevent data breaches, or by the application of consumer protection and data privacy laws generally; the products or services FANS distributes through its platform may contain defects, which could adversely affect FANS’ reputation. Additional information regarding the risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in the Company's Non-Offering Prospectus dated March 27, 2020 filed on its issuer profile on SEDAR at www.sedar.com. Accordingly, readers should not place undue reliance on forward-looking statements.
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