Dermot Smurfit: Why Coolbet was the perfect acquisition candidate

Dermot Smurfit: Why Coolbet was the perfect acquisition candidate
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While 2020 was an action-packed year for GAN, which included going public on the NASDAQ exchange, the gaming platform provider made a similarly eye-catching start to 2021 by finalizing its acquisition of Coolbet for a total purchase price of $175.9m in cash and stock.

Speaking exclusively to SBC Americas, GAN CEO Dermot Smurfit (pictured) disclosed that when considering potential acquisition candidates, he was looking for a company which had the potential to capitalize on the growing opportunities within the US.

“We actually followed a multi-month process reviewing a very large number of potential acquisition candidates in the sports technology space,” Smurfit said. 

“In total, there were 16 potential candidates, some of which were very small startups which required a lot of investment – and frankly – a lot of risk associated with that investment. We then wouldn’t have anything which was obviously capable of addressing the growing opportunities here in the US for a period of years.”

So what was it that made Coolbet stand out? According to Smurfit, the sportsbook’s user-intuitive, modern technology made it the perfect acquisition candidate for GAN.

“Some of the candidates we considered were of substantial scale, but in possession of rather ageing technology,” he added. “Then, there were companies such as Coolbet which were of a much greater interest. 

“Really, it was down to the fact that Coolbet has very modern technology that has been in place since early 2016, on top of the fact that they have proven to be very successful in hyper-competitive markets across Europe and Latin America (LatAm). This, for us, made us believe that Coolbet was the right acquisition for GAN.”

Through this acquisition, Smurfit confirmed that Coolbet will be deployed across the US in a mutually beneficial move for both parties. He explained that GAN’s new and existing clients will gain access to Coolbet’s ‘very user intuitive and very sports gambler orientated’ technology, while Coolbet will benefit from GAN’s presence and client network across multiple jurisdictions.

Smurfit continued: “Coolbet is being deployed in the United States. We are marketing Coolbet technology, product capabilities and sports to all of our existing clients – as well as our new clients as they come through the door. 

“We’re very excited to bring Coolbet’s market leading, very modern product to the US, which has already shown to be very user intuitive and very sports gambler orientated. We think that it is substantially better than many of the sports betting products which are available today in America’s regulated markets. 

“So this will be very much a significant incremental asset and capability for GAN. Coolbet is ultimately going to benefit from the fact that GAN already has multiple clients across multiple states for real money gambling and simulated gambling. And over time, we anticipate being able to cross-sell that to both our new and existing clients both here in the US.”

At the time of the takeover, GAN expressed its confidence in the numerous revenue synergies across both platforms. When pressed on what this means for GAN, Smurfit highlighted the new bi-directional revenue synergies which have been ‘purely incremental’ for the platform provider and the newly-acquired sportsbook.

“So there’s basically bi-directional revenue synergies,” the GAN CEO explained. “You’ve got the incremental revenue which we can obtain out of the US, which is incremental to GAN and to Coolbet from licencing the sports betting capabilities for both new and existing clients. So that’s incremental in the US. 

“Equally, going in reverse, we can see how GAN can integrate and deploy our extensive online casino content library onto CoolBet.com, operating in various different jurisdictions in order to generate incremental licensing revenue for GAN in international markets that we’re not currently in. So it’s purely incremental for both GAN and Coolbet.”

It is apparent that with the opportunities within the US growing day by day that GAN’s focus remains firmly on the post-PASPA market. 

Coolbet, meanwhile, is expected to continue ‘business as normal’ following the takeover, with Smurfit likening its acquisition by GAN to that of a ‘simplistic jigsaw puzzle’.

He said: “If you like, the easiest way to think about technology systems used by operators is to look at a simplistic jigsaw puzzle. You’ve got the concept of a platform, you’ve got the online casino and you’ve got the online sportsbook. 

“Now Coolbet has got its own platform which is fit for purpose in international markets. They have their own proprietary sports betting technology, and they aggregate content from third parties in the online casino. 

“So, Coolbet is going to keep deploying its existing technology in the markets which it is already active in – and we expect them to continue to rapidly grow their business. 

“Equally, we’re going to take one piece of that puzzle – the sportsbook technical capability – and deploy that into the US. Coolbet will continue to rely on its own in-house proprietary platform and sports technology, but we will also deploy that sports betting technology here in the US.

Coolbet has made its name in European markets but Smurfit said that opportunities for the company in the US are limited to B2B integration for clients through GAN’s new offering “GAN Sports”. GAN Sports will incorporate Coolbet’s technology inside the GAN platform, as part of its sport betting offering to partners

“We think that Coolbet as a B2C division of GAN has got a very exciting, continuing opportunity in South America,” he explained. “As it is currently composed, I think that the European business really speaks to their origin as a Scandinavian management team based out of Estonia and licensed in Malta. We are going to continue to grow that part of the business, but the real focus is going to be here in the US going forward.”

As 2021 meant that GAN got off to a fast start, it’s hard to imagine what more exciting news the platform has in store for the next 12 months. But looking to the future, the focus for GAN – Smurfit noted – lies firmly in expanding its presence across new jurisdictions as well as securing both existing and new sportsbook U.S. clients through “GAN Sports” and Coolbet as a B2C brand outside the U.S.

“It really is like looking into a metaphorical crystal ball!” he concluded. “But I’ve got the advantage of having made certain comments to the market already on this. 

“For the future, we expect to secure a number of existing clients for Coolbet technology over time. We expect to convince new clients coming through the pipeline right now that Coolbet is the right sports asset and capability to deploy from day one. And of course, we hope to continue our significant growth across certain jurisdictions such as Latin America.”