Inspired Entertainment acquires Sportech Lotteries for $12.5m

Inspired Entertainment, a B2B provider of gaming content, systems and solutions, on Tuesday said it has acquired Sportech Lotteries, a subsidiary of Sportech PLC.

Inspired said the principal asset of Sportech Lotteries is the lottery systems contract to provide online and retail lottery services, as well as the upcoming launch of Sportech’s iLottery solution, to Loteria Electronica Internacional Dominica SA (LEIDSA) of the Dominican Republic.

The current lottery systems contract with LEIDSA had been scheduled to run until March 9, 2025. Concurrent with closing of the acquisition of Sportech Lotteries, Inspired and LEIDSA extended the lottery systems contract through March 9, 2035.

Inspired reported it acquired Sportech Lotteries for $12.5m on a cash free/debt free basis, subject to certain customary adjustments and up to $2m of potential additional earnout consideration.

According to the parties, the upfront consideration represents a multiple of approximately 4.0x Sportech Lotteries’ unaudited Adjusted EBITDA of $3.1m for the LTM ending June 30, 2021, and 3.5x Sportech Lotteries’ unaudited (pre-COVID) Adjusted EBITDA of $3.5m for calendar year 2019.

The acquisition was funded with cash from Inspired’s balance sheet, the company said.

This marks Inspired’s first acquisition in the lottery sector, which it said further diversifies its business model on a product, customer and geographic level.

Inspired said the Sportech Lotteries deal is expected to provide additional growth opportunities in North America, a key strategic geography for the company. Inspired said it also should bolster the company’s positioning in the growing iLottery market and enhance its ability to offer a platform with a full turnkey lottery/iGaming solution to new customers in the future, in line with its cross-platform approach.

“This acquisition accelerates our entry into the lottery business, where, as a management team, we have extensive collective experience and long-standing relationships,” Lorne Weil, executive chairman of Inspired, said in a statement. “We expect to build on Sportech’s established lottery supply contract to increase our scale and scope within the lottery and gaming ecosystem. We are excited to enhance the value proposition we provide to operators and consumers as we seek to realize on significant opportunities in the sector.”

Weil added: “LEIDSA is one of the largest and most successful lotteries in Latin America. Beyond the immediate potential in the Dominican Republic, we anticipate that the lottery systems platform can be further enhanced in order to accelerate the path of our strategic objectives in the worldwide online and retail lottery market.”

LEIDSA is a private lottery operator in the Dominican Republic that has offered electronic lottery products (draw games, Keno, etc.) as well as a host of other services since the lottery’s inception in 1997. In conjunction with the acquisition, Inspired will control Sportech’s Quantum System for LEIDSA, which supports more than 2,100 land-based outlets as well as software and field service support. Inspired also will license Sportech’s Lot.to system, an omni-channel iLottery solution that manages the entire lottery business from the cloud, which is currently undergoing testing with LEIDSA to launch digital lottery sales during 2022. 

Inspired offers a portfolio of content, technology, hardware and services for regulated gaming, betting, lottery, social and leisure operators across land-based and mobile channels around the world. The company operates in approximately 35 jurisdictions worldwide, supplying gaming systems with associated terminals and content for approximately 50,000 gaming machines located in betting shops, pubs, gaming halls and other route operations; virtual sports products through more than 32,000 retail venues and various online websites; interactive games for 170+ websites; and a variety of amusement entertainment solutions with a total installed base of more than 16,000 terminals.

Sportech is a technology supplier and operator in the gambling market with two core businesses: A digital omni channel platform for gaming verticals, including its own in-house lottery module as its B2B offering. In B2C, the company operates sports bars and other venues in Connecticut, where it deploys its exclusive license to offer pari-mutuel wagering in the state and a distribution agreement with the Connecticut Lottery Company to offer sports betting in the state. It also has the exclusive license to operate pari-mutuel betting online in Connecticut, which it does under the MyWinners.com brand, and a general license for pari-mutuel betting online across the wider USA under the 123Bet.com brand.

Michael Bartlett

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