Industry Reports

LeoVegas Inks Acquisition Deal with Royal Panda Prompted by UK’s New Regulatory Regime

The gambling industry is highly competitive. For many companies, it is hard to stay afloat and they look for various ways to enhance their business unit and remain on the market. Pursuing this goal, more and more companies started to further expand their businesses through acquisition or merger deals. In that way, the companies increase their performance and decrease their costs. By joining forces, it is easier for companies to survive the unfriendly regulatory changes and gambling tax hikes.

Sweden-based gaming operator LeoVegas has always been a company, which keeps a keen eye on the latest trends. The company announced that it is to further boost its iGaming division with the acquisition of all the shares in Maltese online operator Royal Panda. The payment is comprised of an initial-debt free payment of €60 million with a possible earn-out payment equal to the initial one. Under the acquisition deal, LeoVegas is to take over Royal Panda’s debt of €100 million, including a €40 million of a Revolving Credit Facility (RCF). After the acquisition comes to a completion on 1st December this year, LeoVegas is expected to reach a Net Gaming Revenue (NGR) of €50 million and €34 million of the NGR should be generated from the UK market.

Shopping Spree Triggered by UK’s Tough Gambling Rules

The UK is one of the biggest gambling market and one of the most strictly regulated one. The fast-growing industry invoked a change in the country’s gambling regulatory framework. The regulatory bodies were determined to curb irregularities and any gambling-related issues among people. According to various statistics, online gambling and fixed-odds betting terminals (FOBTs) are the largest contributors to the country’s gambling industry. This resulted in the so-called triennial review of UK’s gambling industry, which was mainly focused on the controversial video gambling devices. Apart from that, the UK officials announced their decision to tax freeplays and discounts used by UK-facing online gambling operators to attract the attention of new customers. Under the previous regime, UK-facing operators could use non-taxable bonuses to acquire and retain new players.

Being aware of the latest changes, many industry insiders predicted a flurry of mergers and acquisitions within the global gambling industry. It seems that they made a right guess as many companies penned consolidation deals in order to help each other endure the tough times.

In February this year, Swedish online gaming and betting operator Betsson announced a cash offer to acquire NetPlay TV for the total amount of £26.4 million. In that way, Betsson aimed at expanding its footprint into the UK iGaming market. At that moment, NetPlay TV run sports betting, casino, and bingo operations under a license issued by the UK Gambling Commission.

Following the same trend, online gambling operator Kindred Group, recently rebranded from Unibet Group revealed that it received the necessary approval to acquire fellow operator 32Red for the amount of £175.6 million.