NorthStar Gaming has received a CAD $12.25 million (USD $9.19 million) infusion of capital concurrent with its reverse takeover by Baden Resources. The money comes from online gambling supplier Playtech. The deal means that Ontarians will soon know if NorthStar Bets casino and sports betting products are hometown favorites.
After the Feb. 28 reverse takeover, the Toronto-based online casino and sportsbook’s worth will be more obvious. That’s because of the transparency required of companies whose shares trade on public markets.
Ontario regulators haven’t yet separated out revenue figures for online casino and sports betting revenue, let alone operator earnings. Once NorthStar Gaming goes public, its financial reporting will provide the public with a glimpse into how the company is doing. At the moment, NorthStar Gaming is a subsidiary of Nordstar Capital, a Toronto-headquartered private investment firm.
Nordstar’s brands also include Torstar Corporation, the holding company in charge of the Toronto Star. The latter is Canada’s largest daily newspaper and online news publication.
Reverse takeovers, in which a larger private company finds a smaller public one to acquire it, are one of several ways a company can go public, along with SPAC deals and IPOs. It’s the same path PokerStars took in 2014, using the Montreal-based slots supplier Amaya as its vehicle. (Amaya later changed its name to The Stars Group before being acquired by Dublin-based Flutter Entertainment.)
What’s In It for Playtech?
Playtech (Playtech PLC 452,80 +0,18%) announced today that it’s investing $12.25 million in NorthStar Gaming. The Isle of Man-based online gambling software provider is also extending its commercial agreements with NorthStar for another 10 years. That extended agreement also includes the right to expand with NorthStar Bets casino and sports beyond Ontario “and across the entire Canadian market.”
Playtech will own approximately 16% of the issued and outstanding common shares of the TSXV-listed entity, and will also hold warrants giving it the right to further increase its stake potentially beyond 20% of the issued and outstanding common shares.
As for the software and services agreement, NorthStar Bets casino and sports betting products entered the Ontario iGaming marketplace in May 2022 with the following Playtech items:
- IMS platform
- Live Casino
Playtech’s announcement shows company leaders believe that through Playtech’s “strategic advice to NorthStar, most notably in online operations, managed services, and market expansion,” NorthStar Bets can become a market leader in Canada.
Playtech CEO Moran Weizer said today:
Playtech has extensive experience of what it takes to succeed in newly regulated markets, as demonstrated by the Group’s strategic agreements in other markets across the Americas. We’ve been impressed by NorthStar’s unique business model and product offering, and look forward to supporting them in their mission to become the market-leading online gaming platform in Canada.
NorthStar CEO Michael Moskowitz emphasized that Playtech can help NorthStar Bets expand its user base.
With the additional investment, we look forward to expanding our market share across Ontario and further enhancing our premium, content-driven experience for consumers.
NorthStar Bets Casino Will Help Playtech Grow Live Dealer
Playtech took on US online casino live dealer market leader Evolution (Evolution AB (publ) 9,45 -4,26%), beginning on Christmas Eve 2021 in Michigan and New Jersey.
Bet365 in New Jersey and PlayGunLake in Michigan were Playtech’s first live dealer clients, and the practice of adding in smaller operators to gain market share seems to be continuing with NorthStar Bets in Ontario.
NorthStar’s Expansion Partner Hit a Snag in Illinois
On Feb. 6, Playtech announced it was “seeking a declaration from the English Courts to obtain clarification on a point of disagreement” between it and Caliplay. Caliplay is Playtech and Mexico-based Caliente Interactive‘s joint venture in online casino and sports betting.
Caliplay entered US online sports betting via the Land of Lincoln when the Illinois Gaming Board approved Caliente for an online-only license in April 2022, Gaming Today reported.
Playtech said on Feb. 6:
The matter in disagreement relates to whether Caliplay still holds an option to redeem the additional services fee element of the strategic agreement (the “Option”). … For the six months ended 30 June 2022, the amount of this services fee was €34.4 million (€22.3 million for the six months ended 30 June 2021) and the business has continued to perform strongly since then.
Playtech thinks the option has expired, but Caliplay disagrees.
The parties aren’t allowing the North Star to guide them, though. They’re listening to the English Courts.