Matthew Tripp’s third wagering coming began with a bang, with promises to turn betr, on its launch in 2022, into the most prominent bookmaking brand in the country.
That ambition may still be alive, but as opposed to the earthquake that Tripp, CEO Andrew Menz and his team seemed intent to create in its first six months, it will be a path taken in increments, the latest of which is the acquisition of TopSport by parent company BlueBet Holdings.
The deal was confirmed on Wednesday, with $10 million, 70 per cent in cash and 30 per cent in scrip, plus earn-outs etc, to change hands.
It is a deal of material value to both parties. TopSport had turnover of close to $200 million in the first half of the financial year with net win of $11.8 million, while betr’s turnover was $645 million, with net win of $67.4 million.
TopSport brings 11,300 active customers to betr’s current customer base of 144,700, but the immediate value will be in operational savings.
Betr estimates a $6 million saving based on costs across the first half of the current financial year, with further value built from an improved net win margin on TopSport’s existing customers on a betr platform which BlueBet says will facilitate higher engagement and improved efficiency.
It is a model which BlueBet insists is repeatable and looks to be its key opportunity for growth. It is certainly a change from the first impressions betr made on the market.
Within 12 months of betr’s sensational entrance in the spring of 2022, many wagering experts were reading the company its last rites.
Having got to the altar in a bid to secure the WA TAB, only for that to fall over at the last moment, betr’s betting/media partnership with NewsCorp lasted less than six months.
The media giant was seemingly unable to stomach the risk the bookie took on in its now famous $101 promotional offers, which were built for the acquisition of customers, and acted as a huge disruption to the industry.
Bren O’Brien
Liquor and Gaming NSW had levied a $210,000 fine over those promotions, while betr’s attempt to purchase PointsBet fell short, prompting questions over whether Tripp, Menz and the team had bitten off more than they could chew.
Those backing against betr were doing so knowing full well that Tripp had previously built and sold off multiple betting brands, including Sportsbet, CrownBet and BetEasy. The behemoth which he was aiming to usurp as the country’s leading bookmaker, Sportsbet, owes a considerable amount of its dominant position to his previous acumen.
In May 2023, the company was reportedly for sale, but without a suitor. In a contracting market, its future looked grim, but it eked out an existence and found shelter via an old friend/foe.
Michael Sullivan, the man who had powered Sportingbet to prominence over a decade ago, had helped build BlueBet up to be not only a burgeoning consumer brand, but also as what had been termed ‘a sportsbook as a solution’. Part bookie, part technology platform, a successful IPO in July 2021 raised $80 million, setting the company up to make a mark in the United States.
“The acquisition of TopSport materially enhances BlueBet’s profitability and scale, is highly accretive for our shareholders and brings us closer to our strategic target of 10 per cent plus market share in Australia” - betr chief executive Andrew Menz
But as others such as PointsBet found, the American market has not proven the gold rush most had expected, at least outside the top two to three players. Looking instead for opportunities in the Australian market, BlueBet linked up with Sullivan’s old sparring partner Tripp, with a merger of betr and BlueBet announced last April and completed in July.
BlueBet’s proprietary technological platform matched with the ambition of a marketing and client base of betr promised a lot. Significantly, the betr brand was retained, but even having consummated one marriage, Menz was already talking about others.
Even during the six months it took to bed down the merged entity and put itself on path to profitability sooner than expected the phrase ‘inorganic growth’ seemed on the tip of the tongue.
Warwick Barr
Tripp’s appointment as chairman, replacing Sullivan, who remains on the BlueBet Holdings board, has corresponded with a more ambitious growth phase.
Lloyd and Tristan Merlehan’s TopSport has courted respect as the biggest of the ‘non-corporate’ corporates for many years.
They built a brand of being ‘old school bookmakers’, but as taxation and product fees rocketed, margins diminished to a point where it made more sense to eschew turnover and focus on profitability.
As Tristan Merlehan told The Straight last year it was an approach which didn’t sit flush with his principles as a bookie but was a necessity in the middle end of the market.
“We’re not looking to fish in a massive pond at the moment; we’re looking at trying to make sure the little pond we’re fishing in has a nice shark net around it,” Merlehan told Warwick Barr.
As a result, Topsport’s turnover fell from $1.2 billion at its peak to around $350 million in 2023/24.
And it was that shrewd positioning that made TopSport Australia’s most eligible bachelor when it came to corporate suitors.
Firstly, they had done the work to determine the best approach to customers. Clearly, those customers are valuable, and not already significantly duplicated within the betr database, or otherwise the deal would not have got done.
Neither would it have got done if there were any diligence issues around aspects such as probity. Bluebet is a publicly listed company with a market cap of $187 million, it can’t afford to have AUSTRAC on its case over anti-money laundering or counter-terrorism financing issues.
We wrote last week that for these reasons, and a few others, the great consolidation of the Australian wagering industry hasn’t happened.
Bren O’Brien
Whether the union of Australia’s most determined suitor and its most eligible bookmaker proves a tipping point is yet to be seen.
Significantly, Tristan Merlehan finds himself in a position as betr’s new chief trading officer, doing what he does best, bookmaking, this time on a much bigger scale.
“Tristan Merlehan is one of this country’s most-respected bookmakers and will further strengthen our market-leading risk and trading capability, driving margin improvement and sustainable profitability for shareholders,” Menz said during the announcement.
Merlehan joins a betr executive team headed by Menz and COO Bill Richmond, and including Darren Holley (financial), Gary Harris (technology), Tony Thomas (marketing), Rohit Sharma (data) and Nick Twomey (product).
The market reacted immediately to the announcement of the acquisition, which is part of a $15 million capital raise, with a 10 per cent jump in BlueBet’s share price to 36 cents.
Betr’s stated ambitions are not quite as lofty as when they crashed into the market in October 2022, but the plan to double its market share from around 5 per cent to 10 per cent is still aggressive.
“The acquisition of TopSport materially enhances BlueBet’s profitability and scale, is highly accretive for our shareholders and brings us closer to our strategic target of 10 per cent plus market share in Australia,” Menz said.
“Inorganic growth remains a key opportunity for BlueBet and we have a laser focus and a repeatable M&A model to drive shareholder value by further consolidating the Australian wagering market.”
On basic maths, it has made a couple of points on inroads into that target with this purchase, but you feel the next move may have to be more seismic if betr is to generally become a serious challenger to Australia’s dominant trinity of Sportsbet, Entain and Tabcorp.
