BlueBet and betr join forces to create competitive new wagering service

BlueBet (ASX: BBT) will join forces with online bookmaker betr in a move expected to create a larger and more competitive online wagering service for the Australian market.

Under the terms of the merger, Bluebet will acquire NDT Pty Ltd (the owner of betr) by way of an asset purchase in return for the issue of approximately 265.4 million shares to NDT shareholders.

BlueBet has appointed Ord Minnett as financial adviser to the merger and sole lead manager and underwriter to an associated $20 million capital raising.

Gilbert and Tobin has been appointed legal adviser to the merger and raising.

Betr has appointed Barrenjoey as financial adviser and Arnold Bloch Leibler as legal adviser.

Increased market share

The proposed merger will result in enhanced scale and increased market share, with a combined active customer base across both businesses of 179,000 and approximately 341,000 open accounts.

It will equate to triple the number of customers under the age of 35 for BlueBet and provide betr with access to more advanced technology.

Betr’s customers will migrate to BlueBet’s proprietary technology platform to drive organic and inorganic growth, retention and monetisation.

Additional potential upside is expected from optimal engagement of the entire customer base and increasing betr’s net win margin towards BlueBet’s.

The combined business will transition to a single brand following a review, with advertising and marketing savings to be reinvested into corporate development.

National challenger

BlueBet executive chairman Michael Sullivan said the proposed merger was a “transformational” move for the company.

“We will combine our best-in-class technology platform with betr’s large and high-quality customer base to create a national challenger in the online wagering market,” he said.

“The betr team is fully aligned with this vision and we are excited by the growth opportunities and synergies that will be unlocked through the merger of our businesses.”

BlueBet’s board of directors has recommended shareholders vote in favour of the merger, saying it represents a “significant and compelling opportunity” expected to create material value for the company.

The directors, including Mr Sullivan, have stated they will vote their shares in favour of the deal.

Mr Sullivan’s shares equate to 41.8% equity in the company.

Betr beginnings

Betr was launched in October 2022 as a consortium between News Corp, US-based Tekkorp and founder Matthew Tripp’s investor vehicle TGW.

It is believed Tekkorp was not allowed to remain in the consortium after being unable to fund its launch obligations while News Corp – which injected $75m into the fledgling company – formally severed ties with the business last year, leaving Mr Tripp and his investors as the sole owners.

Betr has quickly grown to record $80m of gross win and $50m of net win in the first half of the 2024 financial year.

Mr Tripp and chief executive officer Andrew Menz have more than 40 years’ combined experience in operating and scaling wagering businesses.

Mr Tripp said the merger with BlueBet was a “major step” toward betr’s ambition to become a Tier 1 bookmaker.

“Today is a significant day for [us]… the combination of our joint scale and the BlueBet technology platform is extremely powerful,” he said.

“[The combined team has] deep experience and highly-complementary skillsets which sets us up well for the next phase of growth.”

Integration date

BlueBet and betr are expected to be integrated onto the BlueBet platform ahead of Australia’s spring racing carnival, which starts in September.

Mr Sullivan will remain in the role of executive chair until January 2025, at which point Mr Tripp will take over.

Mr Menz will become chief executive of the new business while BlueBet chief executive officer Bill Richmond will become chief operating officer.

Capital raising

BlueBet has announced a $20m placement at $0.21 per share to fund its operational and strategic growth plans once the merger with betr is complete.

The plans are likely to include a targeted advertising spend to support customer migration and grow brand awareness, along with initiatives during the migration period to maximise customer engagement on the BlueBet platform in the lead-up to spring racing and during the Australian football and rugby seasons.

Placement proceeds will also be put towards one-off costs relating to customer migration to BlueBet’s platform and decommissioning of betr’s platform, as well as human resources and technology expenses.

The placement will be conducted in two tranches, with the first comprising 49.9 million shares (representing 24.8% of the company’s total) and the second comprising 45.3 million shares.

Mr Sullivan has committed to the purchase of $1m in shares under the placement, while Mr Tripp will subscribe for $2m worth.

Adjusted agreement

Meanwhile, BetMakers Technology (ASX: BET) has confirmed it will adjust a services agreement with betr following the news of its proposed merger with BlueBet.

Betr will continue to use BetMakers’ services under a reduced arrangement until its customers migrate to the BlueBet platform.

This will include a $3.75m fee already paid in March, plus $2.25m to be paid in June 2024 for ongoing services and an amount of up to $2m to be paid by September 2024.

In the event the migration is not completed before October 2024, betr will pay BetMakers a reduced fee of $500,000 per month for the remaining term of the agreement or until the migration is finalised.

The revised arrangement is believed to relieve BetMakers from the provision of certain premium services to betr.

BetMakers chief executive officer Jake Henson said the changes amount to significant cost savings and efficiencies.

“We are satisfied with the terms to recover outstanding amounts owed to BetMakers by betr,” he said.

“It places [us] on a much stronger footing going forward, strengthening our cash position and relieving [us] of a significant resource commitment.”