Who is Endeavor (and can a sport really own a book)?

The sports-betting sector has a head start in getting to know a pivotal figure in the buyout announced this week of Scientific Games’ sports-betting unit OpenBet.

Those who watched the HBO series Entourage over a decade ago will have a feel for Ari Emanuel, the Hollywood superagent who helms Endeavor and was the inspiration for Jeremy Piven’s character Ari Gold.

He is a player, but while he might be a new name in the sports-betting sector universe, his company - or a part of it - isn’t.

Who is Endeavor?

The sports and entertainment business Emanuel heads finally floated in late April over a year after the Covid pandemic threw its listing into doubt.

Via its ownership of IMG, the $13bn valued Endeavor is the world’s largest talent agency.

And within IMG lies the reason why more attention should have been paid to the possibility of Endeavor making the splash it did with the OpenBet buyout. 

That reason is IMG Arena, a data and streaming service working mainly with the betting industry. Among the rights portfolios it controls are the PGA, ATP and the MLS.

Viewing its peer group

By adding OpenBet to IMG Arena, Endeavor will have a new reporting unit set to produce ~$340m in revenues next year excluding synergies.

On the call accompanying the acquisition announcement, CFO Jason Lublin said the new business unit should be viewed alongside a peer group of Sportradar and Genius Sports. 

With only Stats Perform, for now, remaining private it means three of the biggest data and streaming companies are now publicly listed.

But the peer group is wider than this select bunch. In fact, OpenBet’s competitors include a much wider array of companies. 

This includes Kambi, Amelco, and SBTech, (if that can still be said to be a B2B supplier anymore) as well as sports-betting supply challengers such as FSB Technology, Metric Gaming, Aspire Global, and BetConstruct. 

(Apologies to any we have missed there, but there are a lot of you.)

Flight risk

On the call there was talk about “one-stop-shops” and “end-to-end offerings” to both sports rights-holders and sportsbooks along with a mention of OpenBet’s “best-in-class” tech. 

That last claim would likely surprise many in the sector. As Regulus Partners said in their note on the sale this week, Endeavor has taken a “bold gamble on the future of sports betting with a somewhat creaking asset.

The gamble seems to be that there is more juice in tying in rights holders and sportsbooks together in a ‘synergistic embrace’. But as Regulus pointed out, if the plan is to use the platform to drive higher-value sports content sales, then “a conflict might emerge”.

“This may remind OpenBet’s clients of the looming threat of content cost pressure which, combined with a growing tendency to seek technology control in any event, is likely to create several flight risks among OB’s clients, in our view,” Regulus added.

Smaller European-based brands such as Betfred, BoyleSports and Danske Spil certainly might not see the benefits of higher costs. 

Meanwhile, Flutter Entertainment might be tempted to take its Sky Bet and Paddy Power brands in-house and the future of Entain’s brands - and what technology platform they might one day sit on - is highly uncertain.

Direct to sports

Still, going by the comments made on the call, Endeavor might be looking at this from a different angle. 

The US sports-betting opportunity is obvious. But Endeavor appears to be approaching this as a chance for sports to cut out the middleman.

“A sports-rights holder will now be able to come to IMG Arena and OpenBet as a one-stop shop for a complete sports-betting tech stack and content solution,” said Lublin.

The question then becomes why would a sport need all this? One possible answer lies with Endeavor 100% ownership of UFC secured earlier this year, just prior to listing. As the sport’s owner, Endeavor could take any number of approaches to sports betting and it has already signed a five-year official partnership with DraftKings. 

But is the implied opportunity for a direct-to-betting-consumer approach one that even Endeavor/UFC would be willing to take?

Emanuel the disruptor

That may be an interpretation too far. Maybe no sport would truly like the idea of going it alone with all the conflicts of interest that would entail. Maybe Endeavor has no intention of using UFC as a test case.

But there can be no doubt the sector is welcoming a new force, albeit with some familiar tech. 

Notable among the names on the board of Endeavor is Elon Musk. Whether he has ever considered the fortunes of the U.S. sports-betting market, in between planning trips to Mars, transforming the world through electric vehicles or pumping and dumping Dogecoin, is open to debate.

Yet, the comments from Emanuel about his billionaire buddy to CNBC when Endeavor floated are worth repeating. Musk, he said, “always kind of sets the stage for where the world is going.”

“He also gives us insight into where the world is going, and therefore how we can adapt our company, and that’s really what I want from him.” 

Where the U.S. sports-betting sector is heading is a matter for conjecture but with names such as Emanuel involved, that future could yet be far stranger than we ever imagined.