BetMakers to purchase the bets-processing company Sportech for $41 million

BetMakers, an Australian gambling company with a toehold in the U.S. market, has reached a deal to purchase Sportech, a U.K.-based company that provides bet-processing services to a number of major racetracks and account-wagering companies in the U.S.

The deal, which is valued at $41.6 million according to BetMakers, includes all of the “global assets” of Sportech, which processes bets for tracks in New Jersey and California offtrack betting operations in Connecticut, and, outside the U.S., provides betting services to lotteries and several U.K. racetracks, including Ascot. Over the past several years, the company has led efforts to commingle international parimutuel pools as well.

The agreement requires the approval of Sportech’s shareholders.

The purchase is one of a wave of transactions and consolidations involving companies with U.S. gambling operations since a 2018 Supreme Court ruling opened the way for states to legalize sports betting. In addition, parimutuel operators worldwide are increasingly looking to expand their pools to international markets, which is considered the next growth area for racing.

Racing leaders call for global commingling of parimutuel pools

BetMakers, which is based in New South Wales, directly entered the U.S. market in early 2020 when it reached a 10-year deal to run a fixed-odds horseracing platform for Monmouth Park in New Jersey, one of the first states to allow sports betting after the 2018 ruling. However, due to uncertainty over the legality of fixed-odds betting on racing in the state under the existing law, the company has been unable to fully launch the fixed-odds platform, which it intended to market worldwide. [Legislation has been introduced in the state to clear up the legality of fixed-odds bets on racing.]

Sportech entered the U.S. market a decade ago by purchasing the racing assets of Scientific Games, which had previously operated under the name Autotote until branching out beyond parimutuel operations. Autotote was once one of the dominant bet-processing companies in the U.S. market, but it lost market share to its two largest competitors, United Tote and Amtote, after both were purchased by racetrack companies.

In a release, BetMakers said that the acquisition of Sportech will add an estimated $41.5 million of annual revenue to its operations. BetMakers said in its release that its stand-alone operations are expected to generate $6.7 million this year.

“This acquisition will supercharge our entry into the U.S. and position the company for substantial growth on the back of the emerging wagering opportunities in U.S. racing, including fixed odds, where we believe we are well placed,” said Todd Buckingham, the managing director of BetMakers.

The U.S. market is currently inundated with companies both domestic and foreign that are attempting to capitalize on the emergence of sports betting and fixed-odds wagering. Many of the international companies have wide experience in fixed-odds markets due to the longstanding legality of the practice in their home countries, but they are also far less capitalized than the market leaders, which include U.S. daily fantasy sports companies that have partnered with foreign bet-takers in recent years.