OpenBet deal could signal sea change
With Playtech lining up as the most likely party to acquire OpenBet there could be some significant changes ahead in egaming as a result
Against a backdrop of multi-million dollar mergers and takeover deals, the sale of OpenBet is a relatively minor one in absolute terms. But its potential impact on both the supplier and operator sectors is substantial.
There are several interested parties, not least due to OpenBet’s strong links with the UK online gambling sector. Paddy Power, Betfair, Ladbrokes, William Hill, Coral and Sky Bet all rely on its back-end to varying degrees and to control OpenBet is to potentially have considerable influence on the key players in the business.
William Hill is one of the few firms to make a public bid, but an acquisition by any of the big operators would create a troubling position for rival firms. A consortium takeover would not be a surprise as a result, but if a single firm does take charge it’s hard to imagine there wouldn’t be some trouble ahead for both the new owner and its new clients.
Industry insiders feel Playtech is still best placed to complete the deal, having come very close to doing so in the past. Sportsbook is still the missing piece of the puzzle in its otherwise dominant position in the supplier landscape, and it’s worth noting that until now its main competition for major government contracts to-date has been OpenBet.
A change in focus
OpenBet also has a rarely discussed strength in casino, with most of the big UK players running casino brands through its platform. It’s not hard to see why some of them are as concerned at Playtech extending its reach through any takeover deal as they would be by a rival acquiring the supplier. William Hill has gone to great lengths to distance itself from a reliance on Playtech technology and its joint bid with NYX Gaming for Openbet is a clear sign it fears this scenario over others.
It was telling that William Hill’s CEO on Friday said the firm was working on developing its own in-house back-end technology, although this would be an even more formidable task than the much talked-about Project Trafalgar. Replacing a well-established back-end platform with something equally fast and stable would be a huge undertaking and a huge risk.
And there is no shortage of alternative sports betting platforms that will be hoping to swoop in and steal a prize client if the OpenBet and Playtech deal does complete. One potential scenario is the emergence of a new rival with a few key signings in the 12 months following any deal completing, but an in-house future seems more likely.
Throughout the past 12 months we’ve seen the big operators looking to take greater control of their own technology, with the battle so far fought on the front-end. Operators are now developing their own games, unique content and entire HTML5 front-end platforms in an effort to achieve some standout.
The investment case for developing your own content is easy to make, but a multi-million back-end investment is harder to justify in current market conditions. It’s also the type of technology project that is likely to lead to some sleepless nights for executive teams with any downtime not just costly in the short-term but hugely damaging in the long-term.
Consequences of a deal
But if a major rival, or perceived rival, takes ownership of a key supplier then a big shift in thinking is likely to occur. Trusting such an important part of your business to a competitor, or having total reliance on just one supplier may force their hand and its notable that the leading company in the sector, bet365, has always been the architect of its own fate when it comes to sportsbook technology.
What we have come to accept as the working model for successful multi-vertical operators could quietly begin to change. From an environment where operators take best of breed third-party technology and overlay their marketing, operational and trading knowledge on top we could see far more self-contained businesses beginning to (re)emerge.
For a relatively small deal the consequences could be huge. It may be the case that whoever emerges as the acquirer of OpenBet can parlay that into dominance of the supplier sector or use it as a stick to beat its rivals down. But the more likely reality is this industry will use it as a catalyst to accelerate the move to in-house development. And that will be a really big deal.