Bragg Gaming is one of several gambling companies seeking to change ownership, something that looks to be forming a trend for the industry in 2024. As it released its Q4 and annual results, the content and technology provider announced it had formed a special committee to consider the company’s future, including a potential sale.
The Board of Directors confirms that it has formed an ad hoc special committee, chaired by independent Board member Don Robertson, to undertake a review of the Company’s strategic alternatives. The special committee has been appointed to consider and explore strategic alternatives, which may include the sale of the Company or of its assets, a merger, financing, further acquisitions, or other strategic alternatives.
The statement says there is no timeline for completing the review or determining whether a sale is guaranteed.
Companies Seek Exit From Public Trading as Gold Rush Subsides
A potential sale could mean further consolidation of the gambling industry. While a sale or involvement of a US company is not guaranteed, it could follow several large-scale acquisitions. The latest came only days before Bragg’s annual report when Hard Rock International announced its acquisition of 888 Holding’s US assets.
Last year, Fanatics acquired PointsBet’s US assets for $225 million, beating an offer by DraftKings. DraftKings has completed a few significant deals of its own. Earlier this year, it announced it would buy the lottery courier and online casino Jackpocket for $750 million. Of course, its most notable acquisition in the online casino space was Golden Nugget Online Gambling.
DraftKings’ acquisition of GNOG shortly after the latter went public may be the moment that the tide shifted for the US online gambling industry. Before that, US gambling hype was at its peak among investors, so spinoffs and public offerings were the name of the game. Investors were willing to be liberal with their dollars, and companies sought to raise capital for expansion. As it became apparent that the US market is inhospitable for smaller operators, we began to see more companies combining rather than splitting.
DraftKings’ appetite for acquisitions might not be sated yet. Like Bragg Gaming, Rush Street Interactive (RSI) recently announced it’s considering a sale. It’s the parent company of BetRivers and PlaySugarHouse and recently showcased the power of its product in dramatic fashion as it tripled Delaware’s online casino revenue after taking the reins from 888. Some reports say the company has approached DraftKings as a potential buyer—an interesting turn of events, as RSI spun off from Rush Street Gaming, whose Chairman Neil Bluhm has historically been an opponent of DraftKings and other companies trying to expand the footprint of online gambling in the US.
Bally’s is another company looking to escape from shareholder pressures, though it’s taking a different tack. Last month, minority stakeholder Standard General announced a second attempt to buy the shares it doesn’t already own and make Bally’s a private company. The offer values Bally’s at about $700 million. That is much lower than the first offer in 2022, which valued the company at $1.8 billion.
Financial Growth Could Boost Bragg’s Valuation
Bragg is considering its options, but that’s not due to poor financial results. The company recorded strong growth in 2023 and Q4, which could help it find a potential buyer or a merger. Some notable results include:
- Yearly revenue of €93.5 million ($100.5 million), up 10.4% from 2022.
- Gross profit of €49.9 million ($53.7 million), up 10.8% from 2022.
- An increase of 26.3% in Adjusted EBITDA.
- Cash flow from operations at €11.7 million ($12.6 million), up from €5.8 million ($6.2 million) in 2022.
The growth was partly due to Bragg’s expansion of its global footprint, including in the US. A few notable US deals included an extension of the partnership with BetMGM in New Jersey in Q4 and FanDuel in Connecticut and Michigan in Q3. Meanwhile, Caesars Palace Online Casino introduced the bespoke Lady Luck Casino Egyptian Magic slot, an adaptation of Bragg’s Egyptian Magic.
Other notable partnerships outside the US included Betsson, 888/William Hill, and PokerStars. Bragg also launched content in several global markets, including Belgium, Italy, Spain, and Mexico.
An Investor Previously Pushed for a Sale
The announcement by Bragg comes a few months after Jeremy Raper, founder of Raper Capital, the second largest investor in Bragg, advocated for a sale. In an open letter to Bragg’s CEO Matevž Mazij, Raper called for the “immediate pursuit of all strategic alternatives, including a full or partial sale of the Company’s assets, to maximize value for all shareholders.”
Raper pointed out that since the acquisition of the content provider Oryx Gaming, Bragg’s revenue has grown four times. Meanwhile, the company’s Adjusted EBITDA grew fourteen times in that period. However, Bragg’s stock price at the time of the letter was 25% lower than before the acquisition. Raper felt that sale would be the best course of action for what he called an underperforming business and should deliver a “gargantuan premium and certainty of money.”
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