iGaming Daily

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On Friday, the shareholders of Kindred Group PLC sanctioned the 2.4 billion euro takeover of the Stockholm listed gambling group by Francaise Dijon. First announced in January, FDJ's takeover of Kindred will have a seismic impact on the landscape of European gambling, transforming its competitive makeup across the markets of France, Sweden, Denmark, the Netherlands and Belgium. The deal sees FDJ achieve its Paris IPO ambitions by becoming Europe's highest valued gambling group, expanding its presence beyond French shores and the luxury sector. Though transformative, the acquisition carries significant frailties as FDJ's buyout cannot hide Kindred's notable exposure in stagnating Western European markets where wholesale adjustments are required. Hello, I'm Martin Elliott and welcome to today's edition of iGaming Daily. brought to you in partnership with OptiMove, the number one CRM marketing solution for the iGaming market. I'm delighted to be joined today by Ted Menmure, content director for SBC and Connor Porter, senior journalist for CasinoBeats. Hi Ted, how are you doing? Very well, Martin. Good to be back on the podcast. Yeah, it's been a while since we did the Monday big news story. So looking forward to it. Big news indeed, yeah. Yeah. And Connor. How are you? Have we been on this podcast together before? We have done a podcast together before, Martin, but I've never been a part of the Monday Big News team. So I'm excited to join this team of Monday Big News with yourself and Ted. So yeah, looking forward to today's podcast. Excellent. Well, regard it as a promotion. I think that's the way to look at things. Right. I did try and write something clever for the next bit in terms of the greatest French-Swedish partnerships of all time. But... Beyond Freddie Lumberg and Thierry Henry at Arsenal, I was struggling a bit and had to go back to the Thirty Years War, which took place in the 17th century. So it didn't have much relevance. So let's skip anything too intellectual there and go straight into talking about the deal itself. Ted, what's the reaction been to this? Which is, you know, it's two big companies. effectively merging and present in a lot of key markets in Europe? Yes. Well, the deal has been labeled by FDJ as them transforming themselves into a Euro champion. Effectively, FDJ completes one of its Paris Euro Next objectives as it will now move on to the online gambling sector. It acquires Kindred's ample portfolio of online casino and online sports books led by Unibet, Maria, Relax Gaming for its B2B. But I think most importantly, it's like this is a deal that changes the makeup of the competition across key Western European markets. Western markets are themselves going through a regulatory alignment. It'd be interesting to see how it plays out. Okay. And, Connor, looking at it, I suppose, a bit more from the casino point of view, which is your bread and butter, of course, what's the reaction been in that sector? Well, it's been a situation of just expanding the horizons for FTJ across Europe, within the actual release itself they mentioned. about it being a European champion move. There's something that's been on the agenda since the move was initially announced back in January. It's one that expands on that horizon and puts FTJ in the competition of the likes of Etain, Evoke and Flutter when it comes to the online casino sector. Of course, at the moment, France still is limited with its online casino, but elsewhere across Europe now, FTJ has got a stake. in other markets, including the UK with the Unibet and 32 Red Brands. So this is a big move on the European scale in the gambling sector. Sure, sure. And Tad, with Connor touch briefly there on, you know, Evoke, Entain and so on. How do you think this deal changes the landscape right at the very top of the industry and the competition between the very biggest players? Yes, in the sense that a new European PLC has landed in the top 10 valuation of global gambling PLCs. That's an index that has really been dominated by US land-based conglomerates. FTJ's market cap has been enhanced to circa 7.5 billion, but in general, it remains way behind the top echelon of gambling PLCs such as Flutter, Las Vegas Sands, or DraftKings. In a sense, you could argue that FTJ highlights the index again, kind of evolving more towards digital enterprises. And it's unique in a sense that it adds a lottery segment to the makeup of the index that has looked to date kind of favored land-based gambling ventures. Post-deal, FTJ could bolster its value cap and valuation, but that really depends on kindred returning to its previous kind of growth profile. And as it appears, analysts are split on whether it can really do that in the markets that it operates. Yeah, that's an interesting point. I don't know what you think, Connor, but is Kindred really a good fit for FTJ and their growth ambitions? It depends on the angle that you take with it. I think we'll get a better evaluation of it once FTJ publishes its Q3 results later this I suppose if you looked at it the one way that FTJ isn't exactly stepping on its own toes with the deal itself, they're expanding their horizons a little bit in the markets which they are in. It could be good on that front, but if you look at the way that investors are thinking about it, one could suggest that they're a bit unsure about it. The share price did decline by 9.7% on Thursday. according to some reports, that was due to a potential rise in French gambling tax in 2025. Since then, since the deal was announced on Friday, it has recovered a little bit to around 5.6% in the past five days. I think it just depends on the perspective of how to evaluate this going forward. If FDJ doesn't step on its toes with some of the markets that they're in with Kindred, then they should be okay. and therefore be a natural fit with one another. So then therefore there is a bit of harmony on that front. And the competition regulator in France, in order for the deal to approve, they said about brand separation and making sure that it's separate from one another, similar to what it was with the Zeturf acquisition when that went through. So in terms of that aspect, I'm not sure it's going to step on. you know, each of his toes. So I should, it feels like it naturally will be a good fit, but I could see Ted scrunching his face at me through our chat here. So I'm not sure if he has a different perspective. No, I mean, I agree with a lot of what Connor was saying, but I think fundamentally this, the deal comes down to kind of people's outlook on Kindred and especially its exposure in Western markets, be it Sweden or the Netherlands. Does it have the condition or will it be granted the conditions there to grow? And Kindred was a high flyer up to 2021 and it hasn't recovered year on year since then, and I think that is the big, the big pitch of the deal. It's can, will this acquisition refresh Kindred? Can it get back to its post 2021 performance? Yeah, I think, I think that's a really interesting point that, uh, like a lot of the bigger companies in Western Europe, they're finding it tough at the moment because the market is changing. It's not changing in favor of the operators. So whether this continues to be a success story is a really interesting little point. And there's another just a... go off at an angle from this. Kindred also still live in, let's say, a few places like Hungary. I think they might have withdrawn from Norway, but a few places they're not where they would say they're legally entitled to operate. The authorities may have a different view to it. That'll go, presumably, right? That section of the market because FDJ, as the lottery in France, won't want anything to do with that, anything that's not whiter than white. Well, according to prospectus, FDJ want to operate in 100% legally regulated markets. Now, there could be some bandwidth there as in, if you take Finland, for example, it will regulate in 2027. You could take a lax approach to the interpretation of what they mean in the deal prospectus. I think... Viewing this from the initial standpoint, the interesting elements are going to be the integration of Kindred, what gets integrated from Kindred's operations and their portfolio brands with FTJ. And also, I think from FTJ, they view Kindred as a platform or an instant platform to get podium place positions in Belgium. the Netherlands and in Sweden, regardless of what those markets are going under. It's very much a marriage of needs. I was just going to build off that and just mentioned that Kindred's results are coming out later on this month as well on October 25th. So, we'll get an idea of what their market perspective is at the moment when those are released. But in Q2, they said that 65% of their revenue came from Western Europe, 23% from the Nordics. Of course, it's out of the North America market now in Central and Eastern, CES, sorry, it's 10% and the other regions is 2%. You can see how big of a chunk of the revenue is going to be from those Western European and Nordic markets. As Ted mentioned, it could be vitally important for them to try and find those podium positions in order to gain a foothold in those regions. it's, we'll get a better indication of that when they release their Q3 resources to what the current landscape is with FTJ now being, being part of Kindred, acquiring Kindred, we'll get a better perspective of what that will be once the Q3 results come out later this month. Okay. So, you know, it's big news as it happens, but there's a lot of uncertainty around how successful the deal will be and what the landscape is for, for Kindred in some, some tough markets. But this is not the only major acquisition of recent weeks. How does this compare to Flutter's recent acquisition of SNY from Playtech? Okay, so European gambling has seen two big deals come sequentially, but they're two very different deals. Flutter, in essence, are paying a premium to acquire SNYTECH at $2.3 billion. And it's a company and they're betting on the exponential growth of Italy's online gambling market transitioning from retail to online as it's being reorganized by the government. FDJ's deal is more out of necessity for the company to evolve beyond France and also beyond its kind of lottery segment. For me, I think kind of Flutter takes the riskier play on Snite Tech. Whilst I think FTJ are going to be more conservative as it still sees them kind of expand into new markets via Kindred subsidiaries. Also, for Flutter, I believe that the deal is riskier, certainly because they are banking on the Italian government to get it right. Well, yeah, I think we've talked about that many times on this podcast about Italian regulation. And I'm not sure we're any the wiser than we were. years ago when we first started talking about it, right? So it'd be fascinating to see how that plays out. What's the picture in Italy, Connor, around sort of online casino at the minute? Because Italy has been typically, or traditionally, very land-based for its casino, you know, the big slot tours and so on. So a bit of a bounce in online casinos during COVID, but is that still an area where Flotter can expect, you know? big expansion in the coming years? Well, Flutter within its own release said about the Snytech acquisition that it's fully expected the gold medal position in Italy as a result of it. I'm not too sure if we can say the same for several markets with this kindred deal and its respective brands with FTJ. Of course, Flutter is just narrowing in on one market in particular to gain a... a podium position foothold within it. Whereas FDJ is spread across multiple markets and it'll be taking a much more different approach within those markets compared to what Flutter is doing with Snytech. So we'll see on that. Ted, you're shaking your head at me again. I don't like this. Interesting that a couple of the much-talked-about deals, shall we say, have finally been concluded in Europe. Do you think this is ushering in a new era of M&A activity in Europe, Ted? Because obviously people have been very focused on the US in the past few years and you know, there's some activity possibly building around Brazil as well now. OK, look, I mean, the M&A plays never go away in this sector, whether they're European or US in nature. However, I think you're going to make the distinction of what is a European play. They tend to be more pragmatic in the sense of the valuations and what they're actually getting from the deals. I think what you see in Europe is you won't see a multi-million-pound buyout for a technology module as the market is just too mature. You won't see a DraftKings acquiring a simple bet in Europe. To put it in a sense, I think there's kind of more of a sense and sensibility to kind of Euro M&A. And the focus tends to be much more on arranged marriages for convenience, not the kind of shotgun style you see in the US. So to put it, it's all very Jane Austen, let's just say. Yeah. And capital, of course, more difficult to raise in Europe. as that didn't feature in the plot of any of those Jane Austen novels that I studied for English. And what about you, Connor? Are you expecting any further big stories in the next maybe six months or so? Connor Sviggum I think it would be difficult to say, certainly compared to the US, which is becoming a much more consolidated market. You know, it's becoming much more settled. So, a lot of these in comparison to how it was a couple of years ago where it was a lot of acquisitions and such of developments happening in the market when it first properly opened up in the market and states began to regulate gambling and became much more of a frequent process. Kindred themselves have pulled themselves out of the North American market over the past year as we mentioned earlier. So it is becoming a bit more settled in North America. When we're thinking ahead, obviously the big market is going to be Brazil. We've already seen Flutec make an acquisition deal in the market. So further developments could happen there in South America as the Brazilian markets get ready to launch its regulated market next year. So I think the market to keep the eye on would be South America and particularly in Brazil. Obviously an awful lot of talk about Brazil at the moment. So I'm sure there will be some stories emerging from there. And finally, then just before we go, FDJ now calling, describing themselves as this European champion. Can we expect further growth place, further acquisitions from them, Ted? I'm going to be keeping a close eye on the kind of prospectus and its next kind of interim announcements. I think that this deal carries a significant integration and it will be interesting to see how FTJ plays that out. What I think is very interesting about FTJ is that it's a very different type of gambling PLC. It has a lot of duties carried onto itself by being the French national lottery operator. It also has a lot of regulatory disciplines that it has to see through. I think it's very different from the other PLCs in that top 10 that we were referring to. In terms of its M&A plays, I don't necessarily see it going back to online gambling. I think that if you're on the FDJ board, you're probably looking at your plays within the lottery segment in which I think that it's more sensible but it's also more aligning to what FDJs do. undervining what FTJ's strengths are overall. But look, they are a Euro champ. They do have deep pockets. They will be a company that are closely monitored. Okay. And anything to add on that final point, Connor, before we call it a day? Nothing really other than to reiterate what Ted said. We'll get a stronger indication. of what the future plans are for FTJ when we get the figures from their financial report later this month. Given the size of this deal, it would be surprising if they were to follow up with something else and put even more pressure on delivering. I think they'll take this deal for now and see how it progresses going forward within the next six months or so and into the new year to see how. how things play off with the new Kindred acquisitions. Excellent. Well, thank you very much for that. And Connor, thanks for your big news Monday debut, as I believe we turned a bit earlier. Ted, thank you as always. And join us again tomorrow for another episode of iGaming Daily.