Back in the game: Does Scientific Games’ acquisition of Don Best portend a return to the top table?

EGR North America finds out how the supplier is aiming to overcome a slow start in the US market

“Scientific Games will now be perfectly positioned to capitalize on future regulatory developments in real-money wagering and sports betting.” That was the promise from Scientific Games (SG) upon acquiring NYX and its OpenBet sportsbook platform back in January 2018. “We are truly excited by the opportunities that this acquisition presents to us,” added then-SG chief executive Kevin Sheehan. SG’s share price peaked that month at almost $56.

Fast forward 10 months and the share price has more than halved to $23.5 at the time of writing, while OpenBet has secured just one major platform partner in the form of Caesars. It’s wrong, of course, to say the share price dip is thanks to the scarcity of sportsbook deals, but it’s also fair to say the initial flurry of optimism after the acquisition has somewhat dissipated.

Part of the problem, according to sources close to the situation, is that while OpenBet was perfectly suited for massive UK sportsbooks that take huge volume and have in-house trading teams, it was not really cut out for the small-scale, agile-managed world that exists now.

“Sci Games said quite openly that OpenBet was not really ready for the US when deals were first being struck,” says one gaming exec who saw pitches from several sportsbook providers. Another source familiar with the company suggests clients were put off by the mix of products, with the platform coming from SG, the betting engine/sportsbook from OpenBet, and trading outsourced to Sportradar.

On the up

However, SG has been ringing the changes in recent months and addressing these concerns, starting with the establishment of a new sportsbook operations team in Gibraltar, led by Stuart Weston, a former William Hill director. The new European team, which has been filled out with industry veterans from the likes of Ladbrokes Coral and GVC, will help manage sportsbook operations for partnered operators, allowing for “less heavy lifting for installations and ongoing sportsbook management.”

SG quickly followed that announcement with news it was acquiring Don Best Sports, which claims to be the leader in US sports data and pricing, which it provides via approximately 40 pricing analysts watching games and lines, as well as aggregating data feeds from a number of sportsbooks. SG said it would combine Don Best’s trading platforms and expertise with its OpenBet platform to “enhance its sports betting solution for the expanding US market and beyond.”

Keith O’Loughlin, SVP of sportsbook and platforms for SG Digital, told EGR NA the two new teams would be “perfectly complementary.” “The team in Gibraltar can do full-managed operations and trading, covering pretty much everything, while Don Best provides a comprehensive markets and pricing feed. When you add that to the managed trading service, it’s a perfectly complementary piece with 24/7 coverage,” O’Loughlin says.

Financial details of the deal were not disclosed, and estimates from analysts contacted by EGR NA varied wildly, from $100m to $18m. The latter figure is perhaps more reasonable with Don Best revenue reported to be around $15m, suggesting profit in the low millions.

The share price has remained relatively unmoved following the deal, but there are some obvious upsides to outsiders. “From a technical perspective, Don Best already integrates seamlessly with OpenBet, allowing for a much more rapid integration,” says Julian Buhagiar, co-founder of RB Capital.

Leader not a follower

The focus of these various upgrades appears to be on building a more ‘one-stop shop’ that appeals to US operators, although O’Loughlin denies it is a tacit admission that OpenBet was not ready for the US. “Absolutely not,” he says when asked that question. “We look continually at how we can offer the broadest and best service. This is not a reaction. We only want to be in the market when we’re leading the market. This is us looking to improve what we do. We want to make sure we’re a leader not a follower.”

It’s also important to note the acquisition provides some genuine US authenticity in a market which, at times, has railed against the European approach to things like margins and palpable errors. “It’s a truly US-centric product,” says O’Loughlin. “You have to go and stand in a sportsbook in Vegas to get a real sense of sports betting in the US, and it’s something you don’t get from afar. Don Best being based in Vegas, with heritage and expertise there, we thought was a very good fit.

“One of the key themes I’ve heard at every single conference, is, while European operators and providers have sportsbook expertise, the US market and consumer is very different, and the product needs to focus on them. We think there’s an overwhelming sense that customers want a product with a strong US flavor – not just a list of US markets, but a US heritage.”

Don Best also brings its relatively unique US pricing expertise, something that is perhaps currently lacking in the market. Betgenius CEO Mark Locke told EGR NA last month: “Is anyone where they need to be at the moment for US sports? Probably not.” The Don Best deal certainly seems to put OpenBet ahead of that learning curve.

Buhagiar also says the deal will benefit in-play pricing, with Don Best providing access to more than 50 sportsbooks across the US and offshore, together with updated weather alerts, injury news and real-time scores. “Albeit not in itself a first-to-market service [rivals have been doing this for years], the combination of a strong footprint and rich in-play data augur well for the long-term viability of this new acquisition,” Buhagiar remarks.

[subhead] So, have the recent upgrades had the desired effect within the market? “They are definitely moving in the right direction,” says the US exec who was critical earlier, “but there is more that could still be done.” Specifically, he references rumors that Sci Games is in the running to buy European sportsbook provider/operator Sporting Solutions.

“Don Best and Sporting Solutions cover very different sports, so there are quite a few synergies there,” the exec says. When pressed on this, O’Loughlin responds: “We can never comment on that, as you know. I would say we’re constantly trying to improve our offering – sometimes you do it organically, sometimes through acquisition. If it fits, that’s what you do, and we think Don Best helps give us the best turnkey solution for the market.”

OpenBet may have given its rivals something of a head start in the US but helped by the financial firepower of SG it has significantly bolstered its trading and operations expertise in Europe and the US. And with the addition of some genuine Las Vegas sports betting heritage, the old beast may be fast closing in on the competition.

OpenBet | Product | Scientific Games