Betsson invests €6m in Lithuania with TonyBet deal

Betsson invests €6m in Lithuania with TonyBet deal

Tuesday, September 13, 2016 Posted by Andy McCarron
Lithuanian operation latest to be added to Betsson’s roster

The Lithuanian-facing operation run by TonyBet has become the latest brand snapped up by Betsson as the company looks to consolidate its position in the Baltic market.

The deal is worth €4m payable in cash on completion. TonyBet is the second-largest online operator in Lithuania and was founded in 2009 by the eponymous Antanas ‘Tony’ Guoga, a famous professional poker player, in 2009. The deal is just for TonyBet's Lithuanian operation though and the brand will continue in its other markets.

The acquisition is a further expansion of Betsson’s strategy of buying up new brands to enhance its footprint in new or existing territories. “We see strong synergies in this acquisition, through migration of the operator to Betsson’s technical platform, and development of the casino offering.” said Ulrik Bengtsson, chief executive and president of Betsson.

He added that the buyout fits with Betsson’s strategy for increasing revenues from regulated markets. “We have now consolidated our presence in the Baltic region by ensuring local licenses in all three markets, and continue to pursue growth across Europe, organically and through acquisition,” he added. In May, Betsson entered the newly-regulated Latvian market with its Triobet brand.

Betsson said the transaction was worth 3.6 times TonyBet’s annualized EBIT or which translates as around the €1m mark. An earnout of €2m will be payable if certain performance targets are met, which would boost the multiple to a maximum of 7.25 times 2016 EBIT. TonyBet offers primarily online sportsbook and also provides services to a retail network of 20 shops in Lithuania.

The TonyBet offering will now be transferred to the Betsson technology platform Playson.

Betsson issued a profit warning in June largely off the back of falling sports margins. The company said then that sports-betting revenues were hit by lower turnover in multiple markets as well as losses in one strategic market. Additionally, it said it had closed a number of European markets during the past 12 months “as a consequence of a more conservative stance on what markets to accept players from”.

“The restrictions are also an effect of changes in the regulatory landscape and unclear tax regulation,” the statement added.

Nevertheless, helped by its acquisitions in 2015, notably the Georgian operator Europe-Bet, revenues rose 9% year-on-year in the second quarter to June to SEK935.4m. As part of that, casino rose 11% to SEK683.2m or 72% of total revenues while sportsbook contributed SEK223m, an 8% rise and at the higher end of the forecast in the profit warning.

The benefit of recent acquisitions was evident in the number of active players which rose 58% year-on-year to 563,247.

Bengtsson said at the time of the results that remedial action had been taken to ensure future growth in both casino and sportsbook. “Betsson’s subsidiaries operate in a dynamic environment which is highly demanding,” he said.

“They have taken several actions in the past months in order to increase growth and thereby profitability. The sportsbook offering and functionality have been improved considerably, new products have been launched and our casino has been upgraded.”

Totally Gaming says: The multi-brand strategy has worked to date for Betsson and though TonyBet represents relatively small beer, it will provide incremental regulated revenues for the company. A mix of nationally regulated and dotcom operations is back in fashion, but industry-watchers will be interested to see whether the warning back in June was more than a temporary blip.


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