Endeavor Group Holdings, Inc. (NYSE: EDR) is exploring the sale of its sports betting assets, including OpenBet and IMG Arena, with OpenBet possibly selling for a steep discount compared to its original purchase price.

Endeavor acquired OpenBet from Scientific Games in September 2021 for $1.2 billion, but by June 2022, the price had already dropped to $800 million. According to a recent report from Eilers & Krejcik Gaming (EKG), OpenBet may sell for as little as $300 million. This lower valuation could be due to Flutter Entertainment (NYSE: FLUT) potentially moving its business in-house, which would reduce OpenBet’s future revenue.

Though Flutter hasn’t publicly confirmed this move, it is one of OpenBet’s key clients, alongside other major UK-based sportsbook operators.

“OpenBet remains a vital component of sports betting infrastructure, powering Flutter’s UK and Australian sportsbooks as well as Entain’s and Evoke’s UK offerings, though these firms often downplay its significance,” noted EKG.

The discount on OpenBet’s potential sale may also be attributed to the loss of US-based business, as many operators have transitioned to in-house tech stacks.

Limited Interest in OpenBet Acquisition

EKG also highlighted that there aren’t many potential buyers for OpenBet. Apollo Global Management (NYSE: APO), after completing its $6.3 billion acquisition of Everi (NYSE: EVRI) and International Game Technology’s (NYSE: IGT) global gaming units, could be a candidate, but that’s not guaranteed.

Another possibility is a management buyout (MBO). If OpenBet executives pursue this, securing financing could be relatively easy due to the business’s lower sale price and steady recurring revenue. However, OpenBet management hasn’t indicated that this is currently under consideration.

“More likely, private equity or a similar fund could step in, attracted by the discount and reliable revenue streams,” EKG added.

A deal could potentially close within the next month or two, with OpenBet likely to remain largely unchanged.

IMG Arena’s Future Uncertain

Endeavor is also considering selling its IMG Arena sports betting data business, but potential buyers for this unit remain unclear.

“It’s hard to look beyond data giants like Genius Sports (NYSE: GENI) and Sportradar (NASDAQ: SRAD) as likely acquirers,” stated EKG.

Earlier this month, rumors circulated that Genius Sports was interested in acquiring Sweden’s Kambi Group Plc (OTC: KMBIF), but both companies denied the speculation.

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