Recent M&A and other transactional activity in gaming

January 23, 2024

Kristine E. Marsilio and Leen Al-Alami from law firm Duane Morris analyze the state of M&A in today's gaming industry, and why companies need to think wisely before committing.

With the US commercial gaming industry set to break revenue records for the third year in a row, investors and strategic actors alike see potential for growth in the highly diverse gaming sector. This encompasses everything from mobile to land-based and alternate reality/virtual reality gaming.

The second half of 2023 saw a number of acquisitions as industry-adjacent players expanded their business verticals to include sports betting – part of a strategic move to take leadership positions in the industry. Our expectation is that the trend will continue as legal and regulatory regimes throughout the country become more sophisticated in differentiating (and therefore being more permissive with) online sports betting compared with traditional gambling.

For example, in May, Australian gaming and content creation company Aristocrat Leisure entered into an agreement to acquire NeoGames, a provider of iLottery and iGaming solutions, for an enterprise value of $1.2bn. The transaction is in line with the goals Aristocrat outlined in a 2022 financial report of becoming the world’s leading online gambling platform.

On the consumer side, online sports betting seems to be becoming part of the cultural vernacular among certain demographic groups. As such, sports betting platforms with weight behind their name can create a sort of “captive audience” for their other business verticals, producing opportunities for cross-selling among various offerings.

Regulatory aspects of M&A transactions in the gaming space

However, as the frenzy of activity and interest in the gaming sector through mergers and acquisitions (M&A) and related transactions continues, investors will need to consider the regulatory aspects of such transactions as they move forward with their investments.There are a number of regulatory considerations for M&A activity involving licensed gaming entities in the often heavily regulated gaming space.

Notably, many jurisdictions have extensive licensure requirements, including for entities offering ancillary-type gaming products or services. Prior to issuing a gaming license, regulators often conduct extensive background investigations of not only the applicant but also its principals and key persons involved in the gaming operations. This also often extends to persons or entities that hold a certain percentage of ownership or beneficial interest in the applicant.

Moreover, many jurisdictions have strict legal or regulatory prohibitions against the direct sale or transfer of a gaming license. Accordingly, transactions involving the merger or acquisition of a licensed gaming entity are often structured in a manner that maintains the existence and status of the licensee.

Even when a merger or acquisition results in a licensed entity maintaining its status, there are often regulatory obligations that must be met or approvals that must be obtained, sometimes prior to the close of the transaction. Generally, these obligations can arise whenever there is a change in ownership, in the financial or equity interest, or in the persons who have the ability to control or exercise significant influence over the licensee.

Importantly, the precise legal or regulatory requirements under these circumstances vary from jurisdiction to jurisdiction and depending on the specific type of gaming license involved. For instance, the merger or acquisition of a licensed gaming entity may require the licensee to notify the respective regulator of the change post-transaction.

On the other end of the spectrum, a merger or acquisition could require pre-approval by the respective regulator and the licensing and investigation of any new owners or persons with control. Given that some regulatory requirements can be rather extensive, it is important for entities contemplating such transactions to consider how long it may take to obtain any necessary approvals or authorizations prior to closure. This is particularly important when an entity holds gaming licenses in multiple jurisdictions, which may have varying timeframes related to their approval/licensing processes.

While these regulatory approvals or licensing requirements may seem daunting, the precise requirements are generally circumstantial, depending largely on the specific structure of the transaction. As such, these regulatory considerations should be thoroughly vetted by entities structuring mergers or acquisitions in the gaming space.


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