One of the companies Yahoo has spoken with is Australia-based PointsBet Holdings, which has a market valuation of about US$760 million, said CNBC’s source, who asked not to be named because the discussions are private.
All talks at this stage are early, and no deal is imminent. Yahoo hasn’t settled on a target and may not pursue a deal, the source said. Spokespeople for Yahoo, Apollo and PointsBet declined to comment.
Apollo and Yahoo are considering merging Yahoo Sports with an existing sports-betting company, a move that could set up an eventual spinoff of Yahoo Sports. If a deal is struck, the new company would likely keep the Yahoo branding, the source said.
Yahoo was an early provider of fantasy sports tools and has millions of players who would likely be crossover candidates for legalized sports betting. Legalized mobile sports gaming is slowly spreading across the country and is currently operational in 19 states.
The sports-betting industry has slumped in recent months as a swath of companies have made customer acquisition increasingly expensive through significant marketing costs and promotional offers. Last month, DraftKings projected its 2022 earnings before interest, taxes, depreciation and amortization to be a loss of US$825 million to US$925 million, wider than consensus estimates of about US$570 million.
Smaller sports-gambling firms, such as PointsBet and Rush Street Interactive, have slumped in the past year as they fight to compete with DraftKings, FanDuel and BetMGM, the market leaders in the industry. Caesars and its owned-asset William Hill, Fox Bet, and Rust Street’s BetRivers are among other competitors fighting for users in the low-margin sportsbook business.
While Yahoo has aspirations to operate its own sportsbook, Disney’s ESPN isn’t interested in running a gambling operation, according to people familiar with the matter. Disney has held licensing talks whereby a sportsbook could be branded with the ESPN name, but it hasn’t pursued buying a gambling company, the people said. An ESPN spokesman declined to comment.
Apollo acquired Yahoo last year with plans to expand and rationalize the business after Verizon acquired it in 2017 and merged it with AOL. Former Tinder CEO Jim Lanzone was named Yahoo chief executive in September. Apollo is now searching for leaders of its Yahoo Sports and Yahoo Finance units, who will report to Lanzone, according to people familiar with the matter.
Apollo also closed an acquisition to operate The Venetian Resort Las Vegas and the Venetian Expo in Las Vegas for US$2.25 billion last month, which could theoretically cross promote a Yahoo-branded sports-betting product.
Source: CNBC
