In a strategic maneuver aimed at fortifying its digital capabilities, MGM Resorts has announced its acquisition of Tipico’s US tech stack and trading teams spread across Columbia, Europe, and the US. This move, unveiled earlier this week on June 24, signifies a crucial development for LeoVegas’ international betting portfolio. According to iGaming Business, an M&A advisor summed it up saying, “It’s a phenomenal piece of kit with no customers; [Tipico] has been trying to sell it for a year.”
This acquisition could mark a significant shift in MGM’s operational strategy, especially given the floundering state of their existing partnership with Entain in the BetMGM joint venture. The advisor further elaborated, “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.”
Aaron Lee, an equities research analyst at Macquarie US Equity Research, shared his insights on the move. According to him, “[The deal] drastically shortens the timeline to LeoVegas gaining control over their tech stack compared to developing these capabilities in-house and should improve their ability to have a strong start out of the gates in emerging markets such as Brazil.” With Brazil’s online betting regulations expected to be finalized in July and launched by early 2025, this move couldn’t be better timed.
Bill Hornbuckle, CEO of MGM Resorts, had highlighted his ambition to penetrate Brazil and other Latin American markets during a speech at JP Morgan’s Gaming, Lodging, Restaurant & Leisure Management Access Forum in March. “We see [LeoVegas] as scalable if you think about a place like Brazil or some other new markets in LatAm,” he said. “We think we’re positioning ready to go after and we’re excited about that.”
Lee remains a bit skeptical about a complete 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 noted. Yet, he acknowledged that MGM would ultimately aim to solve for the JV structure. “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,” he added.
Despite MGM’s failed £8.1bn bid for Entain in 2021, Hornbuckle has confirmed that he would not make another offer. An MGM spokesperson declined to comment on future independent betting ventures in the US, noting only, “We are exclusive to BetMGM in the US.”
In an immediate ripple effect, LeoVegas is required to transition from its current Kambi sportsbook. Following the announcement, Kambi’s share price plummeted by 9%. However, Kambi pointed to a multi-year partnership extension it signed with LeoVegas in June 2023 as a reassuring factor.
. An ABG Sundal Collier analyst note suggested that LeoVegas would likely migrate onto the Tipico platform once the Kambi contract concluded, noting LeoVegas currently accounts for approximately 3% of Kambi’s revenues.
The analyst note projected, “[Kambi’s] long-term earnings will likely take a hit. However, 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 stated at the JP Morgan forum that MGM was actively searching for a sportsbook platform because “sports betting and sports betting technology” were key components missing from LeoVegas’ portfolio. “There’s four legs to that stool,” Hornbuckle said, praising LeoVegas’ core casino technology and brand. He also hinted at the development of an in-house live casino offering and suggested the firm was nearing the acquisition of a platform to power BetMGM internationally.
Adding another layer to its strategy, MGM announced a partnership with Playtech on June 20 to stream live casino games from its Las Vegas Strip properties. This unique offering aims to provide users with an authentic land-based casino experience.
Hornbuckle has long viewed online expansion as a critical frontier for MGM. In a December interview with iGB, he remarked, “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 think it’s a meaningful way to continue to reach customers 365 days a year.”
The company has quietly assembled a top-tier team to spearhead this digital push, led by Gary Fritz, MGM’s president of interactive. Fritz, previously head of gaming for IAC, is helming growth strategies in digital gaming, including organic growth and M&A activities. Under Fritz is James Brodie, MGM’s head of interactive, international, who previously held a directorial position at Goldman Sachs for European gaming, leisure, and real estate.
Despite Tipico’s inability to gain traction in the US market, with stiff competition from giants like DraftKings and FanDuel, the acquisition appears well-calculated. “Tipico is irrelevant to the US market,” an industry commentator noted, questioning whether Tipico’s US entry had made the group more sustainable or more likely to pursue an IPO.
Following MGM’s announcement, casino staff from Tipico US face uncertainty. Claire Alexander, Tipico’s VP of casino, turned to LinkedIn to address the situation: “Following on from the recent acquisition of Tipico by MGM, I have some fabulous casino staff who won’t be on the market for long! Please reach out if you want more details!”
Joachim Baca, CEO of Tipico Group, expressed gratitude toward the US teams for their dedication and innovation. “On behalf of the board of Tipico Group, I want to thank the teams in our US operations for the last years of dedication, innovation, and passion, that made our US sportsbook and online casino platform the attractive venture it is today,” he concluded.
The acquisition of Tipico by MGM marks a pivotal step in realizing Bill Hornbuckle’s vision for digital expansion, promising to reshape the landscape of online betting and gaming not just in the US but potentially globally.
