Sportech completes Dominican Republic lottery contract sale to Inspired Entertainment for $14.5m

Sportech has finalised the sale of its Dominican Republic lottery contract with Loteria Electronica Internacional Dominica S.A. (LEIDSA) to Inspired Entertainment Inc for $14.5m (£10.8m)

The deal, which sees Inspired Entertainment acquiring Sportech subsidiary Sportech Lotteries, involved an upfront purchase price of $12.5m paid in cash on completion and $2m payable in royalty-based cash revenue from the licensing of digital assets to Inspired.

The upfront consideration represents a multiple of roughly 4.0x Sportech Lotteries’ unaudited adjusted EBITDA of $3.1m for the 12 months to 30 June 2021, Inspired said.

Inspired, which funded the deal with cash on its balance sheet, also revealed the $12.5m represents 3.5x Sportech Lotteries’ unaudited pre-Covid adjusted EBITDA of $3.5m for the calendar year 2019.

LEIDSA has offered electronic lottery products in the Dominican Republic since the lottery’s inception in 1997. The current contract with LEIDSA had been scheduled to last until March 2025, however, Inspired and LEIDSA have extended the contract until March 2035.

Meanwhile, Sportech stated that its board is assessing the capital requirements of the group and will provide an update on the use of proceeds from the sale in due course.

Andrew Lindley, CEO of Sportech, said: “This deal represents Sportech’s exit from the supply of lottery products managed on the Quantum system, which was acquired by BetMakers from the company as part of the disposal of the company’s Tote business.

“This allows the company’s lottery division to concentrate exclusively on supplies managed on its wholly-owned, cloud-based platform. The deal supports the future focus of the company and we are also pleased to hand our valued customer over to the safe pair of hands that is Inspired Entertainment,” Lindley added

Lorne Weil, executive chairman of Inspired, added: “The management of Inspired has a lengthy history with both Sportech and LEIDSA and we are pleased that we were able to work together successfully to complete this transaction to the benefit of all parties.”

Weil further stated: “LEIDSA is one of the largest and most successful lotteries in Latin America. Beyond the immediate potential in the Dominican Republic, we anticipate that the lottery systems platform can be further enhanced in order to accelerate the path of our strategic objectives in the worldwide online and retail lottery market.”

Following today’s announcement, shares in AIM-listed Sportech were up by 5.26% (2p) to 40p in early trading.