MGM Resorts’ latest acquisition of Tipico’s U.S. technology stack and trading teams marks a significant step in their digital strategy. Despite praise for Tipico’s platform, it had struggled to find customers over the past year, according to an M&A advisor who spoke to iGaming Business. The advisor emphasized the potential benefits for MGM: “And by having a player database in the US, MGM could negotiate its way out of the Entain BetMGM joint venture without worrying about losing the technology.”
This acquisition enhances MGM’s online gaming capabilities, a priority for CEO Bill Hornbuckle, and aligns with their ambitions to expand into new markets, including Brazil. “By acquiring Tipico’s US tech stack and trading teams,” Hornbuckle believes that this move would drastically shorten the timeline for LeoVegas to gain control over its technology stack, speeding up their entry into emerging markets like Brazil,” said Macquarie US Equity Research analyst Aaron Lee.
Brazil is on the cusp of finalizing online betting regulations, with implementation expected in early 2025. Hornbuckle expressed enthusiasm for entering the Brazilian market and other Latin American markets during a March presentation at JP Morgan’s Gaming, Lodging, Restaurant & Leisure Management Access Forum. “We see that [LeoVegas] as scalable if you think about a place like Brazil or some other new markets in LatAm, we think we’re positioning ready to go after and we’re excited about that,” he said.
Despite this optimism, Lee expressed skepticism about MGM’s immediate exit from the BetMGM joint venture. “Both sides have consistently signaled their commitment to the JV and that BetMGM will remain the vehicle for the US and Ontario,” he stated. However, he acknowledged that MGM might eventually seek a resolution for the joint venture structure. According to Lee, “It is unlikely that Entain would part with its technology, so the Tipico deal is a way to secure a complete tech platform for the BetMGM brand.”
The backdrop to these developments is MGM’s unsuccessful £8.1 billion bid for Entain in 2021. Hornbuckle has since confirmed that MGM would not make another offer. An MGM spokesperson declined to comment on potential independent betting offerings in the US, reiterating their exclusivity to BetMGM.
In a broader context, the Tipico acquisition is set to impact LeoVegas, which will transition from its current Kambi sportsbook. Kambi’s share price dipped by 9% following the announcement. However, Kambi highlighted its multi-year partnership extension with LeoVegas during questions from iGB. ABG Sundal Collier analysts suggest that LeoVegas will migrate to the Tipico platform once its Kambi contract concludes, given that LeoVegas accounts for approximately 3% of Kambi’s revenues.
Kambi’s long-term earnings could face challenges from this migration.
. However, the ABG Sundal Collier note added, “We do not rule out the potential of MGM becoming a modular client; for example, we see BetBuilder as an attractive product for a company building an in-house sportsbook, as many big operators have out-sourced that product according to our research.”
Hornbuckle’s strategic initiatives include securing a sportsbook platform. At the JP Morgan forum, he reiterated, “There’s four legs to that stool,” extolling the success of LeoVegas’ core casino technology and brand. Beyond casino and sports betting, MGM is also looking to develop an in-house live casino offering.
On June 20, MGM announced a partnership with Playtech to stream live casino games from two of its Las Vegas Strip properties, aiming to offer users an authentic land-based casino experience.
Hornbuckle’s vision for MGM’s digital future hinges on integrating these assets and expanding their reach. “Through BetMGM, both domestically and ultimately through what we do with LeoVegas – whether that’s in Europe, Canada or South America – we want to diversify into digital. We believe it’s a meaningful way to continue to reach customers 365 days a year,” he asserted.
Leading this digital transformation is Gary Fritz, president of the interactive division, who joined MGM from IAC, a company known for developing Match.com. Fritz is responsible for MGM’s growth strategies in digital gaming, and is supported by James Brodie, MGM’s head of interactive for international markets and a former Goldman Sachs director.
Despite Tipico’s lackluster performance in the U.S. market, MGM’s acquisition signifies a strategic shift. “Tipico is irrelevant to the US market,” a commentator mentioned. The wider Tipico group, majority-owned by private equity firm CVC Capital Partners, is questioning whether the move can enhance its presence in the gaming industry.
MGM’s announcement has left Tipico’s U.S. staff uncertain. Claire Alexander, VP of casino for Tipico US, posted on LinkedIn, mentioning the availability of her team members following the acquisition. Tipico’s Group CEO Joachim Baca expressed gratitude to the US teams for their dedication over the years, highlighting their efforts to build Tipico’s proprietary sports betting and gaming platform.
MGM’s bold steps, including the Tipico acquisition, underscore its ambition to bolster its digital gaming presence and strategically position itself in emerging markets worldwide.
