Brazil Gaming Opportunity Behind Better Collective’s $188M Purchase of Playmaker Capital

Brazil Gaming Opportunity Behind Better Collective’s $188M Purchase of Playmaker Capital

Better Collective (OTC: BTRCF) continued with its publicly stated strategy to acquire engaged audiences announcing the $188 million purchase of Playmaker Capital (OTC: PMKRF) earlier this week. The cash and stock deal is expected to close in Q1 2024.

The Canadian sports media conglomerate will bring eyeballs to the affiliate giant. It maintains a diversified portfolio of digital assets. Playmaker Capital also comes with an ad-tech platform called Wedge.

But the most prized asset in the deal is Futbol Sites, a prominent South American digital media brand.

“Brazil and Latin America as an entire region are important to the future growth of the company,” Matthew Schwimmer (head of U.S. strategy and M&A, Better Collective) said.

South America is the largest market yet to regulate online gambling and Brazil is the most sought-after locale in the region. A world exists where gross gaming revenues in the country are greater there than they are here in the U.S. a half decade from now.

“It’s possible if Texas, Florida, [and] California remain on the sidelines,” Chris Grove (partner emeritus, Eilers & Krejcik Gaming) said.

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Better Collective’s legacy business is in Europe. The Copenhagen-based company began collecting U.S. focused media assets in 2019 when it bought Rotogrinders Network, VegasInsider.com, and ScoresandOdds.com.

Playmaker Capital is the second largest acquisition BTRCF has made over that time. The company bought Action Network for $240 million back in 2021.

The Playmaker Capital portfolio collectively generated 2.7 billion website sessions in 2022. Similar Web reports Better Collective’s portfolio averaged 180 million sessions per month between September 2022-August 2023. So, this acquisition will more than double the company’s audience size.

“If you look at monthly web views [and the audience metrics of all our assets combined], outside of ESPN, we are [now] number two in the world,” Schwimmer said. “It’s a huge step up for us.”

Better Collective believes it can marry Playmaker Capital’s ‘traffic expertise’ with its ‘monetization expertise’ to grow company profits.

Historically speaking, Playmaker Capital has monetized its audience with paid advertising. Better Collective believes an opportunity exists to diversify revenue streams and make the already profitable business more lucrative.

“We will be very strategic and opportunistic about improving monetization across these new assets,” Schwimmer said. “We can [also] significantly improve their SEO performance given their traffic, which goes hand in hand with the increased monetization.”

Futbol Sites is Playmaker Capital’s most prominent consumer facing brand. The soccer-focused outlet is the most trafficked digital sports site in Brazil.

Playmaker Capital’s portfolio, however, is rich and varied. U.S. sports fans may be familiar with the sports and entertainment site, YardBarker. The Nation Network (TNN) and Daily Faceoff are recognizable properties north of the border.

But as Grove explained, “the headline on this deal is the opportunity [for Better Collective] to strengthen its position in one of the most hotly anticipated online gambling markets in the world.”

Brazil’s sheer size (think: population of 210 million plus) and the ongoing push towards legalization in the country have stakeholders looking at it as ‘the next U.S.’.

“This is an industry that always needs growth and there are only so many countries on the map,” Grove said.

There are certainly reasons to believe Brazil will become a lucrative gaming market. In addition to its large population, the country is relatively well off and its people have a propensity to wager.

But regulated online wagering has been ‘the next big thing’ in the region for the last two decades. Despite several close calls, legislation has never passed.

So, this deal comes with some uncertainty (which helps to explain why, along with the price, Playmaker Capital was willing to sell).

“These are political issues, ultimately,” Grove said. “They take place within a much broader context and often do not control their own destiny.”

There is a sense permeating throughout the industry, however, that the timing for legalization may finally be right. Progress over time has helped normalize the idea of regulation.

“It feels like there is greater momentum [this time around], and that there are more tangible opportunities, in terms of getting [a positive outcome] across the line, in a significant number of countries,” Grove said (think: Chile, Uruguay, and Mexico too).

So, Better Collective is being proactive and preparing accordingly.

Its latest acquisition “really goes a long way in helping us in Latin America where we didn’t have much [of a media following before],” Schwimmer said. “We drove [traffic] primarily through Tocidoras, which is a company we acquired over the summer, and [via] some media partnerships.”

Of course, it is risky for an affiliate business to rely too heavily on external media partnerships. The company would much prefer to own the assets.

It’s worth mentioning that Better Collective will also get Wedge in the deal. The ad tech platform, which purchases traffic and helps to monetize it view through attribution, is a significant driver of Playmaker Capital profits (think: at least 25% of EBITDA).

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