Apollo Looking to Merge Yahoo! Sports with Sportsbook Operator

Posted on: March 2, 2022, 10:46h. 

Last updated on: March 2, 2022, 11:26h.

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

Apollo Global Management (NYSE:APO) is reportedly holding early stage talks about merging Yahoo! Sports with a sports wagering company.

PointsBet
PointsBet has a media deal with NBC. However, Apollo’s Yahoo! Sports could be courting the sportsbook operator. (Image: Sportico)

CNBC reported the news earlier today, citing unidentified sources that say the private equity company is discussing a possible transaction with Australia’s PointsBet (OTC:PBTHF). But neither Apollo nor the gaming company commented on the matter.

Apollo and Yahoo! are considering merging Yahoo Sports with an existing sports betting company, a move that could set up an eventual spin off of Yahoo! Sports,” CNBC reports, citing sources.

If a deal is consummated, the combined company would likely retain the Yahoo! name. Apollo acquired the internet search provider, which also controls the popular Yahoo! Finance site, for $5 billion last year from Verizon.

Over the past couple of years, the private equity company was attached to multiple sports betting consolidation rumors, including William Hill, the British bookmaker’s international business, and media and sports wagering assets in Australia, among others. In late 2020, Apollo’s Gamenet Group S.p.A acquired International Game Technology’s (NYSE:IGT) Italian digital gaming, gaming machine, and sports wagering operations for $1.15 billion.

PointsBet, Yahoo! Sports Combination Makes Sense

Partnering with a venerable sports media name such as Yahoo! Sports makes sense for PointsBet. While the company already has a media partnership with NBC Sports, the Aussie company is scuffling in the ultra-competitive US sports wagering market.

The operator’s losses exceed $310 million in the US as it battles with larger, more well-heeled rivals such as BetMGM, DraftKings, and FanDuel. PointsBet has issued equity to raise cash for US expansion, diluting investors in the process. Its current market capitalization is around $750 million, down from $2.17 billion a year ago.

At that market value, PointsBet would be easily digestible for Apollo, and it’s likely one reason the Australian company has been the center of recent takeover speculation involving other suitors. Additionally, PointsBet has nearly $380 million in cash on hand, making it all the more attractive to a would-be buyer.

PointsBet also has a license in New York — an enviable trait, as data confirms the recent launch of mobile sports betting in the fourth-largest state is an obvious success.

Sports Betting Consolidation Could Heat Up

With the economics of the US sports wagering landscape proving treacherous, analysts expect takeover talks will heat up with smaller players, such as PointsBet, being the center of much of the speculation.

For Apollo, the acquisition of a sportsbook operator makes sense, because Yahoo! Sports has millions of fantasy sports players that could be converted to sports bettors. That playbook is already tried and true, as highlighted by the dominance of FanDuel and DraftKings in terms of domestic sports betting market share.

It’s expected that gaming/media partnerships will drive more than $30 billion worth of iGaming and sports wagering revenue by 2030. Yahoo! Sports currently teams with BetMGM. It’s not clear what would come of that arrangement if Apollo orchestrates an acquisition of another gaming firm.