Better Collective Bests DraftKings, FanDuel in $240 Million Deal for Action Network

Posted on: May 3, 2021, 01:58h. 

Last updated on: July 5, 2021, 01:26h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Danish betting analytics provider Better Collective is buying The Action Network for $240 million in cash and equity, extending a growing list of dealmaking between betting companies and media outlets.

The Denmark-based company said the transaction will help it boost US revenue to north of $100 million by 2022. New York-based Action Network, which has about 100 staffers, is forecast to generate $40 million in sales in 2021, a doubling on a year-over-year basis. Better Collective adds it will issue $12 million worth of new shares to Action management, “key employees and certain other individuals.” The acquisition is scheduled to close in the current quarter.

The acquisition of Action better consolidates Better Collective’s leading position in the affiliate and customer delivery verticals within online sports betting,” said the buyer in a statement. “Action will become an integral part of Better Collective US.”

As a result of the purchase, the Danish company is now forecasting 2021 sales of $216.33 million with an operational profit of $66.1 million. It previously estimated a profit of $60 million on revenue of $192.3 million.

Winners and Losers in Better Collective Action Network Buy

Last October, research firm Eilers & Krejcik Gaming (EKG) noted The Action Network was a takeover target — a prognostication that obviously came true.

As is the case with most consolidation activity, particularly that involving coveted gaming assets, there are winners and losers in this deal. The Wall Street Journal reports FanDuel and DraftKings (NASDAQ:DKNG) — the two largest online sportsbook operators in the US — along with unnamed private equity firms made runs at The Action Network.

That’s speculation, but DraftKings recently made multiple deals to up its media offerings, including last week’s $50 million agreement with Meadowlark Media and the purchase of Vegas Sports Information Network (VSiN), announced in March.

As for winners, an obvious one that comes to mind is The Chernin Group (TCG), a California-based investment firm specializing in media companies. TCG is the controlling investor in The Action Network. This is the second time TCG hit pay dirt in a sports betting/media combination. TCG was an investor in David Portnoy’s Barstool Sports prior to Penn National Gaming (NASDAQ:PENN) taking a stake in that company last year.

Expect More

Some experts believe the concept of partnerships and outright acquisitions between media and sports betting operators is in its early innings. More of the same is looming, as gaming companies look for new ways of landing customers and as media outfits seek to capitalize on the sports betting boom.

These accords could eventually bear fruit, as some analysts see $30 billion in revenue stemming from iGaming, sports betting, and media combinations by 2030.

As for Better Collective, a company mostly unknown to casual bettors in the US, it gets a platform to winning more customers in the fast-growing US market. The operator says online sports betting revenue in the US should reach $4 billion next year, before ascending to $40 billion in 2033.