Inspired moves into lottery vertical through Sportech Lotteries acquisition

| By Robin Harrison
Inspired Entertainment has acquired Sportech’s lottery technology division for an initial consideration of $12.5m (£9.3m/€11.1m). 

The acquisition marks Inspired’s expansion into the lottery sector to further diversify its product range and customer base, and increase its geographic reach. 

This, the supplier explained, should provide additional growth opportunities in North America as well as strengthening its ilottery offering, as well as allowing it to offer a turnkey lottery and igaming solution to new customers.

The $12.5m cost represents a multiple of 4.0x Sportech Lotteries’ adjusted earnings before interest, tax, depreciation and amortisation of $3.1m for the year to 30 June 2021. A further $2.0m may be paid should the business meet conditions to trigger the earn-out. 

Sportech Lotteries’ principal asset is the lottery systems contract to provide online and retail lottery services to Loteria Electronica Internacional Dominica (LEIDSA), the national lottery of the Dominican Republic. 

Under a contract that runs to 9 March 2025, Sportech’s Quantum System is used to power 2,100 land-based ales outlets, as well as providing software and field support. As part of the deal, Inspired will license Sportech’s Lot.to ilottery solution, which will be used to launch online lottery sales for LEIDSA later this year. 

Alongside the closing of the deal, Inspired and LEIDSA have agreed a ten-year extension to the systems contract, to 9 March 2035.

“This acquisition accelerates our entry into the lottery business, where, as a management team, we have extensive collective experience and long-standing relationships,” Inspired executive chairman Lorne Weil commented. 

“We expect to build on Sportech’s established lottery supply contract to increase our scale and scope within the lottery and gaming ecosystem,” he explained. “We are excited to enhance the value proposition we provide to operators and consumers as we seek to realise on significant opportunities in the sector.”

Weil described LEIDSA as one of Latin America’s largest and most successful lotteries. “Beyond the immediate potential in the Dominican Republic, we anticipate that the lottery systems platform can be further enhanced in order to accelerate the path of our strategic objectives in the worldwide online and retail lottery market,” he added. 

The sale of its lotteries division sees Sportech continue to reshape its business by divesting key assets. Last year it sold its Global Tote business to Australia’s BetMakers, and raffle technology provider Bump 50:50 to Canadian Banknote. 

As a result of this downscaling the company moved its shares from trading on the London Stock Exchange to the Alternative Investment Market in July 2021. Following this, chief executive Richard McGuire and chief financial officer Tom Hearne announced their departures. McGuire replaced by chief operating officer Andrew Lindley, while group financial controller Nicola Rowlands was promoted to CFO. 

Its core business is now its Connecticut-based sports bar and advance-deposit wagering chain, which generated revenue of £11.5m in the six months to 30 June 2021. Income from divested operations took net profit for the period to £24.0m.

Ten of those venues will be able to offer fixed-odds wagering, through a partnership with the Connecticut Lottery Corporation.

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