By Weston Blasi
Online sports betting and gaming company Super Group recently announced its plans to go public via a merger with SPAC Sports Entertainment Acquisition Corp. in a deal that values the new company at a $4.75 billion pre-money equity valuation.
As part of the deal, Super Group will acquire online gaming company Digital Gaming Corporation (DGC) and become the holding company for online gaming brands Betway and Spin. DGC is already licensed to operate in the U.S., and if the deal is approved by regulators, would allow Super Group to immediately operate in 10 U.S. states, including Pennsylvania, and New Jersey — Super Group is not currently licensed to operate in the U.S.
Betway and Spin took in a massive $42 billion worth of wagers from March 2020 to March 2021, when many people were forced to stay home during the COVID-19 pandemic. Compare that with a U.S.-only sportsbook like FanDuel, which only had its first billion-dollar month in January 2021. And Betway was named the official sports betting partner of the NHL earlier this month.
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Super Group is not currently licensed in the U.S., but aims to remedy that through a deal it has reached to acquire Digital Gaming Corporation. If approved by regulators, that deal would allow it to operate in as many as 10 U.S. states, including Pennsylvania, New Jersey, Colorado, Indiana and Iowa. Super Group expects it to be approved by the end of 2021.
As Super Group attempts to break into the U.S. market, the company believes its online-only business model and multi-country reach separates it from other U.S. brands.
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“We have no bricks and mortar businesses, it’s only online,” Super Group CEO Neal Menashe told MarketWatch. “This brand is available across the world. Every country is effectively a market for us — the difference with us is we are open in more countries than our competitors.”
Many of the brands that currently offer sports betting in the U.S., like Caesars /zigman2/quotes/205281174/composite CZR +2.03% and MGM /zigman2/quotes/209932643/composite MGM +1.11% , have retail locations, but most offer online wagering options as well.
“This listing will position us strongly to capitalize on the significant global growth opportunities ahead, including in the U.S. market,” Menashe went on to say.
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Super Group has legal authorization to operate in 23 countries across Europe, Africa and the Americas and the company told MarketWatch it is already profitable.
Most sportsbooks that are popular in non-U.S. territories, like Power Play, 10 Bet, and Betsson, have very little market share in the U.S., and many of them are not authorized to accept bets in the U.S.
The U.S. sports betting market can also be ripe with uncertainty because there are no federal laws governing the practice — it’s up to individual states to legislate their own rules about sports betting. Super Group says its ability to gather revenue from countries all over the world makes it more resilient to the legislative unpredictability that the U.S. presents.
“Company A is sitting over here and it has the United States. It’s open in over 15 states and they need and want New York and Florida. They have a certain level of frustration when the legislative speed limit changes,” Eric Grubman, chairman of the SPAC Sports Entertainment Acquisition Corp., told MarketWatch. “Then you have Super Group over here and it’s looking at New York and Florida, but then it also has Argentina, Brazil, Portugal and Spain.”
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Grubman labeled U.S. sportsbooks like DraftKings /zigman2/quotes/213120645/composite DKNG +1.31% , FanDuel /zigman2/quotes/208882914/delayed UK:FLTR -1.11% , and Penn National /zigman2/quotes/209264611/composite PENN +1.45% as “disruptors” because they don’t have a presence outside of the United States. None of these gaming companies currently accept sport bets in non-U.S. territories.
Grubman, a former NFL league executive and former partner at Goldman Sachs /zigman2/quotes/209237603/composite GS -0.61% , went on to say that the prospects of New York legalizing sports betting , or any state for that matter, won’t make or break his company.
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“All of these states are extra potential, but they are not the only potential,” he claimed.
The combined companies will list on the New York Stock Exchange under the ticker “SGHC” and fall under the name Super Group. The IPO date is expected to be in the second half of 2021.