Roundhill Investments CEO and co-founder Will Hershey joined the Benzinga YouTube show “SPACs Attack” to discuss several sports betting special purpose acquisition companies and some lesser-known sports betting pure plays that trade on foreign exchanges.
Hershey On Sports Betting SPACs: Benzinga asked Hershey about several sports betting SPACs that trade in the Roundhill Sports Betting & IGaming ETF (NYSE: BETZ).
Lancadia Holdings II (NASDAQ: LCA) is merging with Golden Nugget Online through a SPAC. The SPAC does have some red flags, Hershey said, with the SPAC sponsor taking an existing company public and adding some debt.
Golden Nugget Online is a pure play on online casinos, not sports betting, he said.
“[The] ARPU for iGaming is multiples of what it is for sports betting,” Hershey said, adding that iGaming has higher margins.
dMY Technology Group (NYSE: DMYT) is taking Rush Street public in a SPAC deal that will bring the No. 1 iGaming player in the U.S. public, Hershey said.
“Rush Street is really interesting,” the Roundhill CEO said.
Rush Street has its own proprietary technology. Unlike rivals like DraftKings Inc (NASDAQ: DKNG), Rush Street is EBITDA-positive, Hershey said, adding that Rush Street is spending minimally on advertising while also growing its user base and market share.
Hershey likes that Rush Street has a presence in both iGaming and sports betting.
A SPAC that is owned in both the BETZ ETF and the Roundhill Esports & Digital Gaming ETF (NYSE: NERD) is Flying Eagle Acquisition Corp (NYSE: FEAC), which is merging with Skillz.
Skillz has patented technology to help game developers match users in a new betting platform similar to daily fantasy sports, Hershey said. Skillz is creating a second layer of monetization for game creators.
Skillz could be an acquisition target for a large gaming company down the road given their patent, and the key could be partnering with higher-tier games to unlock more value, the Roundhill CEO said.
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Foreign Exchange Sports Bet Picks: Hershey also discussed exposure to foreign-traded sports betting stocks in the Roundhill Sports Betting & iGaming ETF.
Kambi, which trades in Sweden, is a picks-and-shovels play for the sports betting market that’s similar to GAN Limited (NASDAQ: GAN), he said.
“Kambi is a great place to start.”
Similar to GAN, Kambi is a business-to-business provider that helps companies with back-end solutions. Kambi counts Penn National Gaming (NASDAQ: PENN) and Rush Street as customers, Hershey said. Kambi is more of a pure play on the sports betting market, while GAN is focused more on the iGaming side.
Evolution Gaming, another Swedish gaming company, is a B2B play that is pioneering the live casino segment.
“[It’s] taking streaming and introducing traditional table games,” Hershey said.
The company will allow people to engage with real cards at traditional table games with livestreaming.
Aussie-listed PointsBet, which has a partnership with the Comcast Corporation (NASDAQ: CMCSA) unit NBC Sports, is another favorite of Hershey’s.
PointsBet has “pretty unique technology,” he said.
FanDuel is the top brand in the United States sports betting, with a market share of 46%. The company is owned by Flutter Entertainment (Pink: PDYPY). Flutter trades at lower multiples than DraftKings despite its market-leading position.
“I think Flutter is worth a look,” Hershey said
Kindred Group, which used to own Kambi and owns the popular Unibet brand, was a foreign sports betting stock brought up by a viewer of Monday’s show.
Kindred is one of the top holdings in the BETZ ETF and trades at a massive discount to its U.S. peers. Unibet is pushing into the U.S. markets, and Hershey said it represents a “compelling story.”
Kindred trades at a reasonable multiple and valuation, and the “growth kicker is the U.S. story,” he said.
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