Get the ball rolling: Shining a spotlight on recent M&A in the bingo space

After a period of relative dormancy, bingo rose above the parapet to become a hot topic in Q4 2021 as two major acquisitions saw the vertical dominate industry headlines. Flutter Entertainment took the first plunge by signing off on a £402m deal for Sunderland-based, bingo-led operator Tombola to bring the UK’s largest independent bingo firm under its ever-growing umbrella of brands.

Indeed, Flutter revealed how the UK accounts for over 80% of Tombola’s regulated revenue base and that the recreational bingo operator, which recorded revenue of £164m and EBITDA of £38.5m in the financial year to April 2021, boasts 400,000 average monthly players.

Broadway Gaming followed swiftly in December with a $50m purchase of 888’s B2B (Dragonfish) and B2C bingo operations in a move which saw it replace Tombola as the top independent firm in the space. 888 offloading bingo to focus on casino and sports betting certainly raised eyebrows, as did the relatively modest sum involved. The general feeling among industry observers was that Broadway bagged itself quite the bargain for a proven business.

The vertical, often regarded as the third or fourth pillar for operators, the unsexy standard that was always there, has had a shot of adrenaline and appears to be on the rise. With well-established brands such as Mecca Bingo, Entain’s Foxy Bingo and Gala Bingo also making an impact in the market, the vertical appears to be standing in good stead with the opportunity to grow.

Flutter shelled out £402m for Sunderland-based Tombola

Who’s playing?

While casino and sports betting attract the eyeballs and wallets of punters, bingo has had a reliable clientele on tap for years in the shape of an older, generally more female, recreational audience. For Tombola’s new managing director, Ben Reilly, who was promoted from his role as Paddy Power Sports commercial director to lead the acquired bingo operator, the commitment of recreational customers is key to bingo’s past and future success as a vertical.

Speaking to EGR Intel, Reilly says: “I think a lot of people may be surprised by the breadth of demographics that enjoy playing bingo with Tombola. We have an engaged player base with many customers active with the brand for multiple years – and that’s for a reason.”

Customer acquisition is key and attracting a potentially alternative demographic to bingo is a question that has been pointed at operators to ensure revenue does not run stale, and as a potential cross-sell tool for other verticals. And while it is plain to see that the bingo demographic is wholly different to anything else on the market, there is not a desire from within the field to tread too far away from the customer base that has served it incredibly well.

Broadway Gaming CEO David Butler, touching on 888’s decision to offload its bingo assets, notes: “The demographics of the bingo market are very different to that of sports, casino and poker. I think 888 made the decision that, at this point, it was non-core and they wanted to focus on other projects. They thought it was something that would be in better hands elsewhere and I think they were right.”

888’s decision to focus on non-bingo demographics, and potentially ridding itself of a cross-sell tool, is not an attitude replicated by Flutter, with Reilly arguing the onboarding of Tombola will only have a positive impact on total group operations.

He adds: “From a Flutter perspective, the acquisition of Tombola allows us to reach recreational customers more effectively while further enhancing Flutter’s online gaming presence and growing both the bingo and arcade verticals.”

However, the notion of bingo as a cross-sell tool has come under fire recently, with the industry accused of encouraging the female-heavy demographic into the more potentially harmful products like slots.

Research recently conducted on behalf of Clean Up Gambling revealed that women had been targeted by bingo firms with hampers and vouchers in order to ramp up their spending after cross-selling to slots titles. The shift from low-level spend bingo players into high-rolling slots players is a dangerous proposition, although one of the firms named in the report, Mecca Bingo, denied bingo was used “inappropriately” as a gateway to slots.

When pressed on whether there is a need to reshape the bingo audience in line with shifting igaming demographics, Reilly remains adamant that the faithful core will continue to prove fruitful, despite concerns. He continues: “I don’t believe a significant shift is needed any more so than in other gaming verticals. We are confident that we continue to grow market share, with a focus on recreational customers.”

M&A masterplans

As Flutter and Broadway Gaming’s M&A machinations caught the sector’s attention, there is now a sense that the bingo space is set for a dramatic shift in both perception and popularity. For outsiders to the deals, such as MrQ founder Savvas Fellas, this burst of acquisition activity will have an impact both inside and outside the industry.

“[Flutter’s acquisition of Tombola] should bring the spotlight back on bingo, which is great. And it might force people to focus on their own offering. People have been saying that when it comes to bingo, it’s dead. But buying Tombola for £402m, Flutter don’t seem to think so.”

Spotlight is perhaps key here. Bingo holds its traditional retail roots which were impacted severely by the Covid-19 pandemic, causing shutters to be slammed down on venues across the country. The desired shift to online has not returned the same level of revenue for operators and the need to entice users to online offerings is of paramount importance moving forward.

Fellas also poses the question to other operators with bingo offerings on how they will capitalise on this moment. Will they allow Flutter and Tombola to continue to dominate the space? Or will rivals’ hands be forced to become more innovative and shift their potentially stagnating vertical?

Fellas continues: “Anyone running an operational business now in this space is going to be saying to themselves: ‘What do we do? What’s the gap between what Tombola do and what we do? How can we get more playful with the concept of a random number generator?’”

MrQ has responded by building a picture bingo mechanic due to go live in Q1 2022 as it looks to differentiate its product offering, with Fellas also noting he hopes and expects the industry to follow in his footsteps.

Questions were raised over Flutter’s plans for Tombola’s in-house tech stack and if it might be replicated across existing brands. The clamour for in-house tech is all the rage in the industry, and with Flutter adding further firepower, a transition to other brands would appear inevitable. However, Reilly reveals that Tombola will continue to operate as a standalone firm under the umbrella of Flutter and that there are no planned tech migrations for its other brands.

He says: “We intend to operate the business on a largely standalone basis. Our current focus is on understanding the Tombola business and how we can best support growth there. There are no plans to change the offerings from other Flutter brands who will operate largely independently.”

Alternatively for Butler, while the former 888 B2C brands, namely Wink Bingo, will play a key role in pushing the business ahead, the opportunity to leverage the Dragonfish B2B division and challenge the established elite in terms of bingo suppliers is a challenge to relish.

Butler says: “In terms of B2B, we see this as a huge opportunity. When you look at which products there are, there is Pragmatic Play and Playtech. That is not a healthy state of affairs for competition and innovation. From a B2B perspective, we think there’s huge opportunity in the bingo product area.”

MrQ is looking to gain an edge through differentiation

New markets

Outside of the UK, bingo is gaining increased traction as operators look to continue to diversify their product output, with the US proving a potential fertile breeding ground for the vertical. In December, BetMGM, the US-facing joint venture of Entain and MGM Resorts, announced it would be launching its Borgata Bingo product in New Jersey, which would provide US players with access to the first 75-ball real-money bingo product in the country.

With BetMGM already holding the title as top online casino operator in the US, with a reported 30% gross gaming revenue market share, the introduction of bingo will provide another arrow in the quiver for the firm. There is also a desire to tap into the growth of igaming in the States, with BetMGM VP of gaming Matthew Sunderland highlighting the chance for customers to shift from retail to online. At the time of announcing the launch, he said: “Borgata Bingo provides players with an engaging digital gaming experience – one that builds upon the fun of live, in-person bingo.”

Reilly also hints at a potential drive towards the US market, adding: “We continuously monitor the markets we operate in and assess new markets to enter as and when a regulatory model exists. The US is an evolving market and we look forward to seeing what potential opportunities open up there.”

Back in Europe, Tombola was one of the first operators to receive a licence in the newly regulated online market in the Netherlands, ahead of the likes of Kindred Group, Betsson and Entain. Tombola is building out an Amsterdam-based team, fronted by former Activision Blizzard commercial director Marc Smit as country director, and Reilly says he is “optimistic” over Tombola’s chances of success in the market.

“We are optimistic about regulation here in the long-term and are keen to work with local operators and the authorities to create a win-win scenario, where players get a great product, responsible operators provide a safe and fair gambling environment, and regulation generates a tax contribution to the jurisdiction.”

For Butler and Broadway Gaming, regulation is a key sticking point and, while he reveals he is looking to expand operations outside of the UK and Ireland, it must be undertaken with a sense of trepidation and care so as to not renege on the company’s commitment to responsible gambling.

“We do intend to go into other markets. There’s a lot of uncertainty around some of those markets and until we have certainty we will stay out because I don’t think it is a prudent use of resources to invest in a market where you don’t have stability or certainty,” he says.

Butler’s commitment to adhering to regulation is reflected in his relatively left-field view that the review of the Gambling Act 2005, with the white paper due in the coming months, will only improve operators’ bingo offerings.

He adds: “The online gaming space in the UK is not seeing any major growth at the minute bar coming back from the pandemic. We all know there’s a lot of pressure from the regulator and the gambling act review will give us more certainty. I think the bingo space will strengthen from that whole process.”

However, regulation could lead to a severe impact on bingo’s ability to advertise, especially given most of its TV advertising is allowed by gambling laws to be aired pre-watershed. Indeed, the TV schedules in the UK are packed with ads for bingo sites, while popular ITV shows like The Chase and Loose Women are sponsored by Gala Bingo and Tombola, respectively.

A criticism levelled at the sector is that online bingo has flourished because operators can advertise on daytime TV and then cross-sell players into casino games. It’s a valid point. Should the Gambling Act 2005 review bring in advertising restrictions, as have been seen in Europe, with small, late-night windows being the only space for advertising allowed, bingo will surely suffer a slip in engagement.

Glitz and glamour

“It may not seem as glitzy as casino or sportsbook, but it is a very solid business. It is a resilient income stream with resilient revenue in that space,” muses Butler. Perhaps that is where bingo has been traditionally, but there are the rumblings that it could outgrow the space it holds in the makeup of the industry.

But there is also no need to start sprinting when a light jog has more than sufficed. Tombola being sold for £402m indicates the vertical has been building up to this milestone moment and has been in fine fettle for a number of years prior. Bingo is not new, or “glitzy” as Butler puts it, but there is an opportunity to grow and Reilly, despite having been in the role for a matter of weeks, is highly positive for the future.

He says: “Bingo is an exciting area to be working in, one we believe has plenty of potential for future stardom. I’m still only a few weeks in the door but I have been really impressed by the talent and ambition of the team at Tombola. I’m excited about the future and where we can take this business.”

From the half empty halls of seaside towns to potential for future stardom, bingo’s star continues to shine.