DraftKings is reportedly considering acquiring Simplebet

Published: May 28, 2024, 01:28.

Last updated: May 28, 2024, 01:28.

DraftKings (NASDAQ: DKNG) is said to be close to acquiring micro betting provider Simplebet in a deal that could value the target at $120 million to $170 million.

This news was reported by Earnings + More, citing unidentified sources familiar with the matter. For now, neither DraftKings nor Simplebet have confirmed acquisition talks. Both companies have a history. In 2021, they signed an agreement under which Simplebet provided micro-betting services to DraftKings Sportsbook. Currently, a potential suitor is the potential target’s biggest customer.

Micro betting is an emerging offshoot of in-game or live betting – areas where operators are looking to increase fan engagement. While a traditional in-game bet may be based on scenarios such as a baseball team scoring in the middle of an inning or other game-specific situations (point discrepancies, totals, etc.), the micro betting concept offered by Simplebet goes even further.

Assuming Simplebet sells for $170 million, that represents a significant discount to its $210 valuation following its 2021 $28.6 million Series C funding round.

DraftKings on the shopping spree

Rumors that DraftKings was considering acquiring Simplebet emerged about two weeks after the former announced a deal with Sports IQ Analytics, a provider of analytics and data used by sports betting operators to set odds for bets on players.

Terms of the deal were not disclosed, but it is believed to be in the range of $50 million to $70 million. Adding the possible $70 million paid by Sports IQ Analytics to the $170 million (potential) from Simplebet, that means DraftKings will spend almost $1 billion on acquisitions from the start of 2024, taking into account the $750 million the operator paid online lottery provider Jackkies . It was a cash and equity transaction.

Specialist odds providers such as Simplebet and Sports IQ Analytics have been favorite targets for sports betting operators over the past few years. Such transactions include PointsBet’s transfer of $43 million to Banach Technology in 2021. PointsBet US was later acquired by Fanatics and operates under this brand.

Last year, Entain Plc (OTC: GMVHY), which controls half of BetMGM, paid $266 million in cash to sports analytics provider Angstrom Sports.

Why Simplebet makes sense for DraftKings

Simplebet products allow sportsbook customers to place bets on in-game events, including balls and strikes in a baseball game. Capitalizing on players’ need for instant gratification, in-game micro betting is attractive to gaming companies because it is a high-margin segment.

Micro-betting also focuses on technology, and it is often more efficient for bookmaker companies to acquire technology for this purpose rather than build it themselves.

According to the company’s website, Simplebet’s other clients include Bet365, ESPN Bet, FanDuel and Hard Rock Sportsbook.