Apollo considers merging Yahoo Sports activities with betting corporations, sources say

Apollo Global Management, the personal fairness agency that acquired Yahoo from Verizon for $5 billion last year, is having preliminary discussions with sports activities betting corporations to merge their property with Yahoo Sports activities, in response to individuals conversant in the matter.

One of many corporations Yahoo has spoken with is Australia-based PointsBet Holdings, which has a market valuation of about $760 million, mentioned the individuals, who requested to not be named as a result of the discussions are personal.

All talks at this stage are early, and no deal is imminent, mentioned the individuals. Yahoo hasn’t settled on a goal and will not pursue a deal, the individuals mentioned. Spokespeople for Apollo and PointsBet declined to remark.

Apollo and Yahoo are contemplating merging Yahoo Sports activities with an current sports activities betting firm, a transfer that would arrange an eventual spin off of Yahoo Sports activities, two of the individuals mentioned. If a deal will get achieved, the brand new firm would possible hold the Yahoo branding, the individuals mentioned.

Yahoo was an early supplier of fantasy sports activities instruments and nonetheless has hundreds of thousands of gamers who’re more likely to be crossover candidates for legalized sports activities betting. Legalized cellular sports activities gaming is slowly spreading throughout the country and is now operational in 19 states.

The sports activities betting trade has slumped in latest months as a swath of corporations have made buyer acquisition more and more costly via important advertising prices and promotional presents. Final month, DraftKings projected its 2022 earnings earlier than curiosity, taxes, depreciation and amortization to be a loss of $825 million to $925 million — exceeding consensus estimates of about $570 million. Quick-seller Jim Chanos told CNBC in December he has taken a brief place in DraftKings due to its “insane” advertising spend.

“You possibly can imagine in sports activities betting … however this enterprise mannequin is flawed,” Chanos mentioned.

Smaller publicly traded sports activities playing corporations, similar to PointsBet and Rush Road Interactive, have slumped previously yr as they combat to compete with DraftKings, FanDuel, and BetMGM, the market leaders within the trade. Caesars and its owned asset William Hill, Fox Wager, and Rust Road’s BetRivers are amongst different rivals preventing for customers within the low margin sportsbook enterprise.

PointsBet has partnered with former New Orleans Saints quarterback Drew Brees on numerous tv commercials which have aired on networks together with broadcast community NBC. Comcast’s NBCUniversal struck a multiyear partnership with PointsBet in 2020. Yahoo also has an existing betting partnership with BetMGM. It is unclear how current partnership agreements can be affected by future mergers.

“Everyone seems to be speaking to everybody proper now,” mentioned one govt who requested to not be named. “There must be consolidation.”

The extreme competitors has led corporations to supply hundreds or even thousands of dollars in free cash to first-time customers to join their purposes.

Whereas Yahoo has aspirations to function its personal sportsbook, Disney’s ESPN is not interested by operating a playing operation, in response to individuals conversant in the matter. Disney has held licensing talks whereby a sportsbook might be branded with the ESPN title, nevertheless it hasn’t pursued shopping for a playing firm, the individuals mentioned. An ESPN spokesman declined to remark.

Apollo acquired Yahoo final yr to develop and rationalize the enterprise after Verizon acquired it in 2017 and merged it with AOL. Former Tinder Chief Govt Officer Jim Lanzone was named Yahoo CEO in September. Apollo is now looking for leaders of its Yahoo Sports activities and Yahoo Finance models, who will report back to Lanzone, in response to individuals conversant in the matter.

Apollo additionally closed an acquisition to operate The Venetian Resort Las Vegas and the Venetian Expo in Las Vegas for $2.25 billion final month, which may theoretically cross promote a Yahoo-branded sports activities betting product.

Disclosure: Comcast’s NBCUniversal is the mother or father firm of CNBC.

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