PointsBet, Rush Street Interactive Considered Takeover Targets

Posted on: March 7, 2023, 02:44h. 

Last updated on: March 8, 2023, 01:04h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Amid expectations that 2023 could be a year of significant consolidation activity in the sports wagering industry, PointsBet (OTC: PBTHF) and Rush Street Interactive (NYSE: RSI) remain potential takeover targets, according to market observers.

Rush Street Interactive
A Bet Rivers sportsbook in Illinois. Operators Rush Street Interactive and PointsBet are seen as takeover targets. (Image: Wall Street Journal)

Both operators have long been tied to mergers and acquisitions speculation. Those rumors persist even though no deals have materialized, and both firms remain independent entities today. Howeve, with analysts forecasting an uptick in takeover activity this year, there’s speculation that could change. PointsBet CEO Sam Swanell recently noted some suitors have expressed interest in the Australia-based gaming company.

The amount of third-party strategic interest shown in our company demonstrates we have built a very valuable business,” he said during the company’s fourth-quarter financial update. “This gives us significant optionality around how we take the business forward to maximize value for our shareholders.”

PointsBet’s Australia and US operations have both been the subjects of takeover chatter.

Why PointsBet, RSI Could Be Attractive

PointsBet could be an interesting target because it’s established in the attractive US market, despite its small overall market share.

Combine PointsBet’s current US licenses and market capitalization of just $309.48 million, and it could be an affordable target for a buyer that believes it can expand the operator’s domestic footprint. Penn Entertainment (NASDAQ: PENN) would likely win a PointsBet takeover because the regional casino operator owns an equity stake in the Aussie firm.

Specific to Rush Street Interactive, that company’s market value is $860.23 million — palatable for any number of larger suitors. It’s also nearing profitability, making it all the more attractive to would-be buyers. The operator also offers an attractive mix of US and Latin America exposure.

RSI operates under the BetRivers and PlaySugarHouse brands, and is currently available with mobile or retail businesses in Canada, Colorado, Illinois, Indiana, Iowa, Michigan, New Jersey, New York, Pennsylvania, Virginia, and West Virginia. The company is also one of the largest sportsbook operators in Colombia and Mexico.

Interesting RSI Rumors

RSI went public in 2020 following a reverse merger with a special purpose acquisition company (SPAC). Since then, it’s been a rumored target for some big-name suitors. That chatter could intensify because of the operator’s iGaming exposure, which is coveted and significantly more profitable than online sports wagering. Should even a small number of states approve internet casinos this year, RSI takeover talk could gain momentum.

Previous speculation indicated ESPN and Fanatics expressed interest in acquiring RSI, but no deal came to life. Those companies may revisit possibilities with RSI, or other entities could get involved.

“There’s also been speculation that private-equity firm Apollo Global Management could scoop up RSI as it looks for a sports-betting operator to merge with its Yahoo Sports assets,” Insider reported.