Bally’s Continues Acquisition Spree, Buys Fantasy Sports Provider Monkey Knife Fight

Posted on: January 25, 2021, 08:53h. 

Last updated on: January 25, 2021, 11:40h.

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

Bally’s Corp. (NYSE:BALY) is extending its acquisitive ways, saying Monday it’s buying daily fantasy sports (DFS) company Monkey Knife Fight (MKF).

Bally's MKF
Monkey Knife Fight logo cutouts at a stadium. Bally’s is buying the company for $90 million. (Image: Twitter)

The transaction makes the gaming company the third operator to feature both DFS and sportsbook businesses under one umbrella, joining rivals FanDuel and DraftKings.

The all-stock deal for closely held MKF is valued at up to $90 million. California-based MKF immediately receives “exercisable penny warrants to purchase up to approximately $50 million” worth of Bally’s equity. The contingent warrants to buy $20 million in the casino operator’s stock on the first and second anniversaries of the acquisition closing.

The contingency relates to MKF’s continued operations in jurisdictions in which it operates at closing. The transaction is expected to close in the first quarter of 2021,” according to a statement.

Monkey Knife Fight is itself an acquisitive company, recently buying rival FantasyDraft. That purchase solidifies MKF’s position as the third-largest US DFS company behind FanDuel and DraftKings.

Familiar Playbook

While MKF doesn’t yet have DFS brand recognition on par with its large competitors, Bally’s acquisition makes sense.

The Rhode Island-based casino firm is in the midst of a massive iGaming and sports wagering push. Taking a page from the playbooks of DraftKings and FanDuel, which leveraged DFS success to procure sports wagering licenses in some states, Bally’s could do the same. MKF is available to players in 37 states, Washington, DC, and Canada.

Accounting for pending deals, Bally’s will soon operate 15 gaming properties in 11 states. Currently, the only state in which the company has a footprint that hasn’t authorized sports wagering is Missouri.

MKF has 180,000 registered users and 80,000 regularly depositing players, giving the buyer a significant untapped mine of potential clients that could eventually be converted to sports bettors — a strategy also used by DraftKings and FanDuel.

“MKF will support Bally’s plans to develop a potential sports bettors database in states such as California, Florida, and Texas, which are expected to account for 20-25% of U.S. sports betting revenues (according to Wall Street analyst research estimates),” according to the buyer.

Bally’s notes the deal will position it for market access in Canada. That country is expected to soon approve regulated sports wagering.

Complementary Move

For Bally’s, the MKF transaction fits some of the operator’s recent deals. Last November, the company said it’s paying $85 million over 10 years to put its name on 21 regional sports networks (RSNs) owned by Sinclair Broadcast Group.

On the same day, the firm said it’s paying $125 million in cash and equity to buy sports betting technology platform purveyor Bet.Works.

Bally’s believes adding MKF to that mix aids in its quest to become the first vertically integrated internet casinos and sports wagering operator in the US.

Another winner in Bally’s purchase of Monkey Knife Fight is the NFL Players Association (NFLPA). The labor union for the league’s athletes took a financial stake in the DFS provider last October.