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Why M&A deals for US sports-betting affiliates are heating up, according to industry insiders

  • Sports-betting affiliates are in the spotlight as M&A ripples through the US gambling sector.
  • We’ve seen a recent wave of deals for companies including The Action Network and Oddschecker.
  • Insiders say more sports startups and publishers will likely start pursuing affiliate businesses.
  • See more stories on Insider’s business page.

Sports-betting affiliates like The Action Network are having a moment as M&A ripples through the US gambling sector.

Affiliate group Better Collective bought the Chernin Group’s The Action Network for $240 million. Flutter, the Irish gambling giant that owns FanDuel, sold sports-betting affiliate Oddschecker to US investment firm Bruin Capital for $218 million. And just last week, Gambling.com Group, an affiliate that publishes online gambling comparison sites, had its initial public offering in the US.

The deals are part of a spate of M&A activity driven by gambling operators and suppliers looking to reach wider audiences.

Affiliates are an important piece of the puzzle, one banker who advises sports media and gambling companies told Insider.

Sports-gambling affiliates operate sites that generate revenue mainly by linking out to sportsbooks in exchange for fees when players sign up or deposit money into a betting account. Some affiliates publish reviews of and promotions for various sportsbooks. Others post daily odds and analysis to help gamblers pick their bets. They typically rely on a mix of content, data, and SEO capabilities to get in front of gamblers when they’re looking to place bets.

While some sports-media publishers also generate affiliate revenue, the companies that are colloquially referred to as “affiliates” differ in that their content mainly serves to drive traffic to gambling platforms.

Affiliates were one of the first industries to cash in the rise of legal sports gambling in the US. But until recently they were largely overshadowed as customer-acquisition vehicles by sports-media properties such as Barstool Sports and Bleacher Report.

That’s not the case in mature sports-betting markets like Europe. The banker estimated that European gambling operators spend roughly 40% of their annual marketing budgets with affiliates. A past study of gambling companies in the UK by Regulus Partners found that gambling operators in the region spent about 20% of their marketing dollars on affiliate marketing in 2017.

In the US, the view of affiliates is starting to change.

Operators need every tool at their disposals to sign up customers while keeping costs down. For every dollar in revenue a new online sportsbook generates, roughly 46% goes toward acquiring and retaining customers, research firm Eilers & Krejcik Gaming estimated.

The M&A boom could spur more affiliate businesses

More companies are popping up with affiliate-revenue models.

Digital-media brands like Barstool Sports have eyed affiliate revenue streams. The banker source said more publishers could try this model as they look for ways to monetize their audiences besides advertising and subscriptions.

“I think we’ll see more and more of these types of businesses look to do what The Action Network has done,” the banker said. “The media companies definitely want to turn on the affiliate switch.”

Startups like American Affiliate, which acquired wagers.com and props.com, are also growing the space beyond the handful of major affiliate groups and smattering of smaller sites.

“There’s a scarcity of quality gambling media assets that can attract, engage, and convert traffic,” said Chris Grove, a partner and gambling analyst at Eilers & Krejcik Gaming, who is also helping launch American Affiliate and previously worked at Catena Media.

Potential buyers of affiliates include:

  • Super affiliates, or affiliate groups like Better Collective, Catena Media, XLMedia, and Raketech, that are expanding their reach locally and nationally. Gambling.com Group CEO Charles Gillespie also told Insider that the newly public company is considering potential acquisitions.
  • Data and tech suppliers like Sportradar and Genius Sports that want to offer gambling operators a full suite of services
  • Companies that could use affiliates alongside other sports ventures, like investment firm Bruin Capital
  • Companies known for affiliate marketing in other industries that could expand into sports gambling, like Red Ventures

Gambling operators, however, will probably stay out of the running. Affiliates make money by referring users to sportsbooks. It behooves them to work with a range of operators, because people tend to visit affiliates to compare odds or promotions across a range of sportsbooks. They might not trust an affiliate that’s owned by and exclusively promotes a single sportsbook.

“The example of Flutter carving out and selling Oddschecker I think underscores the value of independence in this industry,” said Harry von Behr, managing director of affiliate Spotlight Sports Group.

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