Reaction: What analysts are saying about the NYX/OpenBet deal

By David Cook
In arguably the most significant M & A deal to have been announced this year, it emerged on Monday that NYX Gaming Group is to acquire OpenBet for £270m, with William Hill investing £80m towards the deal and Sky Bet contributing £20m.

As expected, this has got the industry talking. Here is how three industry analysts feel about the acquisition.

Warwick Bartlett, CEO, Global Betting and Gaming Consultants :

“This will enable NYX to become a serious software competitor in the UK. William Hill has set out a series of investments for future development and I suspect that will be geared to upgrading casino and slots.

“With regards to OpenBet’s position in the enlarged group, it will depend on which entity has the most expertise. Very often the managers of the company being acquired have more expertise, which is why their business has been acquired. Alternatively, NYX may have a strategy that OpenBet had previously not considered. Time will tell.

“The big question is whether NYX will lose some of its other customers because of fear of contracting with a company part-owned by a competitor. The second question is whether a company serving two important shareholders will be left behind on innovation from competitors such as Microgaming and Playtech, who are serving and taking input from more customers. It seems the consolidation that is taking place with operators is now being induced on providers.”

Ali Naqvi, equity analyst, Peel Hunt:

“All they [William Hill and SkyBet] seem to be doing is getting the technology for the back-end sportsbook and just securing it. My understanding is that if another competitor, say Ladbrokes for example, had bought it, everyone else who is on that platform would start thinking they need to migrate away from it, because you don’t want a direct competitor to be holding that technology. Now that it’s got an independent third party, and that’s what NYX were quite keen to stress, it seems to me that it’s more palatable. Paddy Power Betfair came out and said they felt positive about it and it seems to have gone down ok. My thinking is the same. Yes, they have a deal to look at the technology, but is that the silver bullet? Probably not.

“If everyone is using the same platform, it’s difficult for them to say they are not going to invest in a company, because they were already investing in it, one way or another. Personally, I think this is just to secure the technology platform. They don’t want to take it in-house. I think William Hill tried to do that before and it hasn’t worked out well. They’re now able to source this and say this is going to be their platform that they will use. But if you’re over-reliant on one supplier, they can have power over you and it doesn’t save them in that way.”

Steve Donoughue, gambling consultant:

“OpenBet were one of the builders of the online sportsbook industry, claiming practically all the main bookmakers as their clients and have happily continued to do so with a reputation as being one of the ‘good guys’.

“My concern about this purchase is that this may not be the case in the future. NYX know little about sportsbook, hence their interest. William Hill does, but arguably not on the technology side of it, as they still struggle to roll out Project Trafalgar and are basically just Playtech retreads.

“In a world where OpenBet was part of the resistance fighting the evil empire that is Playtech, will a Death Star blow up Chiswick’s piece of Alderaan?”
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