DraftKings and Kambi agree to cut ties no earlier than September 30 2021
Arrangement means sports betting giant is permitted to deploy its proprietary technology ahead of deal termination
DraftKings and Kambi have reached an agreement regarding the migration phase of DraftKings from the Swedish supplier to its in-house sports betting platform.
Their partnership, forged in June 2018, will come to an end no earlier than September 30 2021, although DraftKings will be able to leverage its own technology (SBTech), in full or part, until that date.
However, Kambi has secured full revenue, with any revenue generated by DraftKings prior to September 30 2021, either via Kambi or following a migration away from the Stockholm-listed provider, subject to the same level of payments.
DraftKings and Kambi have also decided that their partnership will not be extended to additional jurisdictions beyond January 2021, except where Kambi agrees to any additional service delivery.
Kambi’s CEO Kristian Nylén said: “Since partnering in June 2018, the Kambi-DraftKings relationship has proven to be highly rewarding for both parties, delivering first-class sports betting experiences to players across more states than any other sportsbook, and establishing Kambi and DraftKings as true leaders in their respective fields.”
He continued: “The agreement we’ve announced today works to secure a strong revenue stream for Kambi for the next 15 months, while our growing and exciting portfolio of partners leaves me with no doubt that Kambi is well placed to extend its leadership position over the months and years to come.”
DraftKings recently completed the acquisition of sports betting supplier SBTech in a $3.3bn three-way merger involving special acquisition company Diamond Eagle Acquisition Corp.
The Boston-based sports betting, casino and DFS operator sees owning its own technology, rather than being reliant upon a third-party supplier, as a key part of its strategy to become the market leader in US sports betting.
The eight-year-old business has grabbed a strong position in the expanding US sports betting industry with a presence in eight states and last week was the first company to launch online casino gaming in West Virginia.
Meanwhile, Kambi today recorded a 31.6% revenue loss year-on-year for Q2 2020, with Nylén labelling it a “testing period” for the supplier.
The Malta-headquartered firm reported revenue of $17.2m, down from $25.1m in Q2 2019 – although H1 2020 revenue $49.6m) remained flat year-on-year from $49.5m in 2019 despite the Covid-19 pandemic.
Q2 2020 EBIT fell to $-3.9m from $2.9m in 2019, while post-tax profit was also recorded at a negative, $-3.5, compared to $1.9m in 2019.
Despite the negative financial impact of the Covid-19 crisis, Kambi’s net cash position increased from $38.5m to $45.4m and its employee headcount grew to 862 despite previously implemented cost-saving measures.
Nylén said: “After what has undoubtedly been a testing period for Kambi, as it has for everyone in our sector, I’m proud of the resilience and underlying strength we have displayed in recent months, which bodes well for our future.
“Of course, the financial numbers published today aren’t as I would have hoped back when we were planning for 2020, but they do reflect a business able to deliver when faced with both adversity and uncertainty,” he added.
Kambi’s share price was down 7% to SEK212 ($24) in early trading.