Potential Acquisition Of Simplebet Could Give DraftKings Leg-Up In A.I. Race
The post Potential Acquisition Of Simplebet Could Give DraftKings Leg-Up In A.I. Race appeared first on SportsHandle.
As leading sports betting operators continue to see an increase in parlay mix as a percentage of overall handle, industry heavyweights have sharpened their focus on micro-betting.
Fresh off the completion of its acquisition of Jackpocket, DraftKings may be close to adding to its war chest, according to recent media reports. DraftKings is on the verge of acquiring micro-betting platform Simplebet, gambling newsletter Earnings + More reported.
The two sides are close to a deal, according to Earning + More, which cited multiple unnamed sources in the report. It is unclear when a potential deal could be announced and a DraftKings spokesman did not respond to a request from Sports Handle.
Simplebet incorporates cutting-edge technologies such as artificial intelligence (A.I.) and machine learning, to deliver rapid betting outcomes on individual plays. The ubiquity of artificial intelligence has the potential to reshape the business world, while possibly transforming the global economy. By 2020, artificial intelligence will bolster the GDP of North America by approximately 14.5%, according to PwC, which estimates that A.I. will contribute more than $15 trillion to the economy worldwide. In sports betting, the company that properly leverages A.I. to its advantage can gain a leg up on the competition.
Spike in betting volume
Simplebet, a business-to-business micro-betting provider, is off to a strong start in the early stages of the Major League Baseball (MLB) season. In mid-May, Simplebet indicated that it recorded more than seven million wagers since the start of April. Over the six-week period, the company noted that handle jumped 120% year-over-year and that it also saw a considerable increase in unique users.
“We are delighted to see triple-digit growth in our baseball product across the first full month and a half of the season compared to last year, as the betting public continues to engage with the excitement generated via micro-betting,” said Simplebet CEO Chris Bevilacqua in a statement.
Across the industry, sportsbooks are increasingly turning to algorithmic solutions to power their operations. PointsBet set the market in 2021 with the acquisition of in-play provider Banach Technology (which was passed on to Fanatics in a subsequent transaction). More recently, Entain completed the acquisition of Angstrom Sports, a sports modeling and analytics company, in a deal that could be worth more than $200 million. Simplebet may be a natural fit for DraftKings given that former CFO Jason Park will focus on the company’s A.I. initiatives in his new role as chief transformational officer.
A quick perusal of DraftKings’ daily splits reveals copious ways for bettors to wager “on the game inside the game.”
On Wednesday, for instance, a wager on Shohei Ohtani to record the Over 0.5 home runs (+340) against the Mets ranked as DraftKings’ most popular prop.
Ohtani rewarded bettors by crushing a 95-mph sinker over the left-centerfield fence at Citi Field. The sportsbook also offered markets on hits, RBI, total bases, strikeouts, and total outs by a pitcher through its daily menu of props.
Simplebet is even more granular with its offerings. Through certain sportsbook partners, Simplebet offers totals on the speed of the next pitch. For baseball, Simplebet’s models contain data from at least 4.8 million MLB pitches over the past 15 years.
The New York-based provider also incorporates machine learning tools from at least 800,000 historical at-bats to power its proprietary in-game betting engine. A ball on a 1-1 count to Ohtani could drastically alter the odds of the Dodgers scoring a run in the first inning.
Last October, Simplebet took home the mantle for Online Betting Product of the Year at the American Gambling Awards. The provider also received nominations for top betting products at three prominent industry events last year.
Negative outcome bets
As Americans mostly stayed home at the height of the pandemic, Simplebet went live in 2020 with an automated, micro-betting platform. At the time, Simplebet co-founder Joey Levy gushed that the platform could deliver a new price to a partnering operator in roughly 1.5 seconds from the time a play occurred. Levy has since jumped to Betr, a micro-betting operator he launched with boxer Jake Paul. Since then, the uptime has improved, with the average processing time now down to approximately 250 milliseconds, according to Simplebet’s website.
The micro-betting provider offers automated pricing and trading across seven different leagues, most notably the NFL, NBA, MLB, and LIV Golf. In golf, the inherent risk-reward nature of the sport caters to the quick fingers of micro-bettors. When Brooks Koepka found a greenside bunker on the Par-4, 421-yard No. 2 last June at Valderrama, the odds on his score adjusted accordingly.
Bet offerings featuring negative outcome props have garnered controversy in light of the NBA’s lifetime ban of former Toronto Raptors center Jontay Porter. The NBA and its authorized gaming operators are reportedly mulling restrictions that would outlaw bets on two-way players. In the college ranks, several states have prohibited prop wagers on NCAA athletes this year.
From an integrity standpoint, a negative outcome prop enables an athlete to manipulate the result of a wager. LPGA standout Nelly Korda has delivered a superlative season, but even the best golfers falter at times. On Thursday, Korda carded a crippling 10 on a Par-3 at the U.S. Women’s Open. To steer past any integrity concerns, operators can offer odds on a Korda birdie without posting lines on a total blowup.
Nevertheless, micro-bets on the result of the next pitch in baseball or the next basket in the NBA Playoffs allow fans to remain engaged during lopsided contests. Simplebet describes micro-betting as the “future of in-play betting” as it provides a customer with an opportunity to receive “skin in the game, without committing to a full outcome.” Simplebet declined comment on the DraftKings’ deal speculation through a representative.
Defensive dealmaking
Besides DraftKings, Simplebet also partnered with Caesars Sportsbook and bet365 during the 2023-24 NFL season. The prospect of in-game micro-betting may appeal to sharp bettors, who look for every advantage to capture inefficiencies in the market. During the week of the Super Bowl, Amazon told Sports Handle that the company is intrigued with the potential of coupling Next Gen Stats with betting on specialized prop markets. Theoretically, the technology is available to bet on whether Puka Nacua will hit the over on his receptions against press-man coverage based on catch probability data from Amazon Web Services’ Next Gen Stats.
As with any defensive deal, DraftKings would gain a foothold on its competitors with the acquisition of Simplebet. DraftKings reportedly gained a 15% stake in Simplebet when it signed a partnership with the B2B provider in 2021.
The purchase price for Simplebet may fall below the $210 million valuation it received that year during a Series C funding round. E+M pegged the amount at a range between $120 million and $170 million.
According to E+M, the final price may depend on various “earnouts related to product landmark achievements.” When asked if either side has signed a letter of intent, a source declined to comment on Thursday. A letter of intent is a non-binding document that articulates key parameters of a potential transaction, most notably the proposed price. A completed letter of intent is a prerequisite for parties before progressing to the “due diligence” phase of a negotiation.
While the U.S. still lags behind Europe with in-game betting, there are signs the market is closing the gap. During its most recent quarter, Genius Sports saw a 60% increase in live betting from its NFL-partnered sportsbooks compared with the same period in 2023.
At the same time, the introduction of new betting products continues to drive engagement, Genius wrote in a first-quarter earnings presentation. Genius Sports, a leading sports betting data provider, operates a practical duopoly on sports data rights with archrival Sportradar.
Last week, DraftKings completed a $750 million acquisition of digital lottery app Jackpocket. While addressing analysts at the company’s first-quarter earnings conference call, DraftKings CEO Jason Robins indicated that he didn’t anticipate another major acquisition on the forefront.
However, the company announced the acquisition of odds provider Sports IQ Analytics earlier this month. In a May letter to shareholders, DraftKings noted that it plans to generate about $400 million in free cash flow in 2024. Following the completion of the Jackpocket transaction, DraftKings expects to have more than $1.1 billion in cash and cash equivalents by year’s end.
The post Potential Acquisition Of Simplebet Could Give DraftKings Leg-Up In A.I. Race appeared first on SportsHandle.
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