2022 Year of the Betalian, page-7

The Las Vegas-based Davey started his career with the Northern Territory Gambling Commission in the early 1990s, before getting involved in the online poker machine game industry. Industry giant Scientific Games bought Davey’s outfit NYX Gaming for $US631 million in 2017, and he funnelled his personal windfall into an investment vehicle, Tekkorp, which now has investments worth around $200 million across 20 gambling-related companies.He’s the biggest shareholder in ASX-listed racing industry data and IT provider BetMakers, with a 15 per cent holding and a board seat, and has also set up a $US250 million NASDAQ-listed “blank cheque” vehicle to buy promising sports, digital media, and gaming outfits.Davey says the wagering market is growing faster than anyone expected as Americans were pulled in by the bookies’ onslaught, along with the many who have long been betting regularly with illegal bookmakers.“You’d be amazed at the number of people I’ve spoken to who actually know the name of the local bookie,” he says.The other driver has been broadcasters who see gambling as an advertising bonanza and a way to make their sports broadcasts more exciting for their declining traditional TV audience.“Sports betting is a proven product for engaging the audience in a much more meaningful way,” he says. “They see it as in some way stemming the tide that is moving away from linear to digital.”BetMakers’ US strategy is to work with the horse racing industry to introduce “fixed odds” betting to America alongside existing parimutuel (or TOTE) betting, and provide the back-end technology to racetracks, regulators and bookmakers to run it. Australia’s annual racing turnover ($27 billion in 2019) is roughly split between the two betting formats.“In the US you only have one [parimutuel] and that is a $US10 billion market today for a population that is 10 times bigger than the Australian market,” Davey says.Fixed odds betting will start in New Jersey this month and Davey is hopeful that states will follow as it is proven to revive interest in racing.“Most people think that is a dead industry, they can’t believe anyone would go down to the racetrack - that’s what their grandparents used to do,” he says.“It’s a poor consumer product and one of the reasons why from a BetMakers perspective, there’s such an opportunity to improve [its] quality and therefore popularity.”Davey says it will take another three to four years for the US wagering market to stabilise, and with that will come a string of mergers and buyouts.“There are 37 or so operators in the US, there’s probably only half a dozen that need to be there once the market matures, so there will be M&A opportunities.”Swanell agrees that consolidation will follow the initial land grab and says the loss-making PointsBet will probably be a part of that, either as a buyer or a takeover target.“It’s unlikely we’ll go the next three years without us doing something inorganic,” he says. “But that’s true for every company in the space, even the bigger guys.”