Sports Betting M&A to Be Driven by New Products, Tech, Says Expert

Mergers and acquisitions activity in the North American sports betting industry has been brisk this year with operators making buys to add technology and exposure to new arenas.

At least one expert believes a similar cadence will play out in 2025 as online sportsbook companies look to bolster customer acquisition and retention tools and tech stacks while forging further into new growth frontiers, such as internet lottery. As one example of that theme, DraftKings (NASDAQ: DKNG) said in February for lottery provider Jackpocket.

We expect betting operators to display a similar mix of M A motivations in the next 12 months with interest in five key areas,” said Chris Grove, partner emeritus at Eilers Krejcik Gaming (EKG), at the Global Gaming Expo (G2E) earlier this week. “We might see interest in customer relationship management tech and other back-office capabilities. Free-to-play games designed to feed acquisition funnels are another category to watch.”

He added that there’s unlikely to be much movement in 2025 in terms of combinations because prior deals haven’t delivered for buyers.

The need for operators to deepen and improve their parlay offerings, particularly those of the same-game and in-game variety, could be another catalyst that drives 2025 consolidation.

“Anything that allows an operator to price better, especially for parlays, will be of interest. Despite the rash of recent acquisitions, there’s still plenty in the market (GiG, Huddle, Kambi, Kero, nVenue, Swish),” added Grove.

There’s been evidence of such moves this year, including DraftKings’ August announcement of its . Other operators are seen as needing to strengthen parlay menus, indicating related deal-making could be at play in 2025.

Grove also pointed out that iGaming could be fertile territory for acquisitions next year, but buyers are more apt to consider adding technology providers rather than purchasing direct rivals in the name of adding market share.

Compliance and regulatory issues, including cybersecurity and geolocation, are facts of life for online sportsbook operators and pricey ones at that. Reduction of those costs could compel gaming companies to pursue related acquisitions, but EKG’s Grove noted “economics can be tricky.”

As for payments, operators would undoubtedly like to realize cost savings on that front and they could use consolidation to accomplish that objective, but that theme is likely further out than 2025.

“It’s a massive cost center and a critical part of the user experience, but it’s also a logistical and liability nightmare in the US,” concluded Grove. “FanDuel, for instance, spends 6% of NGR on payment costs. We believe the in-housing of some part of the payments stack maybe even most of it is all but inevitable, but we are bearish about any of that happening in the short term.”