Entain has provided an update on the strategy surrounding its two biggest investments in recent months, its strategic partnership with TAB NZ and acquisition of 365scores.
TAB NZ agreement details
CEO of Entain Australia and New Zealand Dean Shannon gave an update on the firm’s new agreement with New Zealand’s only licensed betting operator, TAB NZ.
First agreed in March this year, the 25-year agreement went live last week on 1 June.
The agreement sees Entain assume the management rights of TAB NZ’s Wagering division, as well as its Trackside Media business.
TAB’s Wagering division provides racing and sports betting in both retail and online environments, and is New Zealand’s only betting licensee.
The deal therefore provides Entain with unrestricted access to the New Zealand betting market, estimated to generate revenue of some NZ$600m annually from NZ$2.5bn in betting handle.
TAB also operates TAB Trackside, the largest sports outside broadcasting operation in New Zealand, having broadcast over 100,000 races to customers over the past 12 months.
TAB NZ will retain its online and land-based gaming revenue, machines and leases for shops with machines, with Entain managing the operations on a service fee basis.
In addition to taking over the management rights of TAB’s existing brands, Entain will have the opportunity to launch a new, digital-only sister brand in New Zealand.
TAB deal commercial structure
The commercial structure of the deal sees Entain and TAB NZ split gross profits from the operations 50/50, with a minimum return guarantee to TAB for the agreement’s first five years. Entain will be responsible for all marketing and operating expenses.
Entain paid an initial upfront consideration of NZ$160m under the deal, including NZ$10m in direct funding to New Zealand’s horse racing industry.
Throughout the rest of the deal’s term, Entain has committed to a minimum annual return of NZ$150m back to TAB NZ, which it said “will allow the right investment to be put back into racing immediately,” and “benefit all stakeholders in the ecosystem in coming years.”
TAB NZ boasts more than 250,000 active digital customers, and generates more than three quarters of its wagering revenue from online betting, with the remainder coming from retail and on-course betting.
The new agreement with Entain will help TAB deliver “an enhanced betting experience” to customers in New Zealand, it said, leaning on the FTSE 100 operator’s product expertise and global reach to improve its offering.
Entain estimates the New Zealand betting market to grow some 35% over the next five years to generate more than NZ$800m annually.
Presently, Entain estimates around 30% of New Zealand’s NZ$600m betting market is lost to offshore operators, which the group hopes to “win back” through enhanced products and offerings, as well as the launch of its new sister brand.
TAB’s New Zealand betting operations have a steady operating expenses base of NZ$110m-120m, according to Entain, with capital expenses of around NZ$5m.
Entain expects total marketing and operating expenses for the operations to be around NZ$140m-150m per year.
The first 12 to 18 months of the deal will be an investment period for Entain, it added, allowing it “to establish the right framework for the remaining 23 years of the partnership.”
365scores acquisition details
Elsewhere, Entain provided a further update on the strategy surrounding the newly acquired 365scores business.
Entain first agreed to buy the sports media business for £120m in April, with potential additional contingent payments of up to £8m also making up part of the deal.
The brand provides sports information focused primarily on live scores, as well as editorial and social content and free-to-play games.
Commenting on the acquisition in Entain’s latest update, the operator’s chief strategy officer and president of new ventures Sameer Deen said it was clear “the important role that sports content and data will play in our industry going forward.”
Deen led the process of acquiring the business and will be responsible for the brand going forward.
With some 18 million average monthly users, Deen said 365scores is expected to provide Entain with several strategic and financial opportunities in the future.
The brand’s app ranks among the top five sports industry apps globally, and holds an even stronger position in Latin American markets where it is ranked in the top three.
In addition to its large user base, those users are also highly engaged, Deen pointed out, with returning app users visiting the brand around 100 times per month – compared to traditional betting app averages of around five times per month.
Entain intends to leverage that customer base to broaden its existing offering, deepen its presence with customers and expand across recreational audiences.
In addition, the data-rich business will help to enhance Entain’s insight on customer interests and behaviours, Deen added.
The brand is expected to generate EBITDA of £23m-£30m by 2025, meaning the deal had “an attractive financial profile before including any revenue synergies,” Deen said, with the acquisition price set at between 4x and 5x the brand’s expected 2025 EBITDA.
Collaborations and partnerships between 365scores and Entain’s existing brands are expected to add “some incremental upside” in the coming years, Deen concluded.
Updates on such synergies will be made available by Entain in the future.
Entain has agreed to buy sports media business 365scores for $150m (£120m) with potential contingent payments of up to $10m (£8m).
365scores provides sports information, editorial and social content, as well as free-to-play games.
The company has a rapidly growing audience of over 15 million active users and is ranked in the top five sports score apps globally, according to 2022 rankings by Data.ai.
The 365scores platform collects personalised and relevant sports data from news sources in real-time, enabling sports fans to create their own sports channel and receive live news and notifications.
It supports 10 sporting categories in 20 languages and has around 80 employees.
According to information published on Pitchbook, 365scores was founded in 2008 and is headquartered in Hong Kong.
Testing new formats
Entain stated the acquisition would provide its customers with a wider range of interactive content and experiences by combining 365scores’ expertise in data-driven sports media content with Entain’s global scale and leading platform capabilities.
“The acquisition unlocks further growth opportunities and supports our global strategic ambitions,” Entain said in statement.
When presenting the group’s 2022 results, CEO Jette Nygaard-Andersen had confirmed that M&A would continue to be a key component of Entain’s growth strategy.
She had added that the company aims to “continue to test, learn and experiment with new formats”, including multiplayer free-to-play and live game shows, as well as partnering with leading household entertainment names.