Under the terms of the agreement, Betr will acquire the platform’s source code as it currently exists, while FansUnite will retain the use of the platform and source code, as well as the ability to further maintain and develop it.
“With the completion of this sale, we will reduce annual costs, ensuring we can execute on our strategy to generate positive cash flow this year.”
– FansUnite CEO Scott Burton
Further, FansUnite retains the ability to sell any future improved versions of the platform to another buyer in the future. Future sales would not include any enhancements made to the platform by Betr post-close.
Betr will acquire the platform for total consideration of around C$10m, comprising C$3m in cash upon closing and C$2m in Series A2 preferred shares in Betr, to be settled through warrants.
Further milestone payments worth C$5m will be payable over 12 months following the close of the transaction, upon completion of certain integration milestones, and will also be divided into C$3m in cash and C$2m in warrants to purchase preferred shares in Betr.
FansUnite and Betr background
At present, FansUnite provides the PAM system for Betr’s operations, which it said makes Chameleon an “excellent fit” for Betr’s long-term strategy of owning its own technology platform.
Betr has also engaged 28 FansUnite employees or contractors to continue work on the platform, while the parties have entered into a transition services agreement with respect to certain transition services to be provided post-close.
“This is a transformational transaction for FansUnite and we are excited to move forward as a business that is a dominant player in its sector with the ability to execute on a profitable growth strategy,” said Scott Burton, CEO of FansUnite.
“With the completion of this sale, we will reduce annual costs, ensuring we can execute on our strategy to generate positive cash flow this year.”
Betr CEO Joey Levy added: “This is a transformational transaction for Betr that enables Betr Gaming to fully control our ability to execute against our core strategy, while also capturing a material amount of gross margin for our business model.”Levy also said the purchase will allow the business to begin developing its ‘V1’ of the Betr product, after launching its so-called ‘V0’ in Ohio shortly after the brand was first announced in order to build its user base, gather feedback and prove its concept to the market as quickly as possible.
“Finally, we are thrilled to have been able to execute this acquisition in a cost-effective manner consistent with how we have rolled out Betr Gaming and Betr Media from both market access and talent acquisition standpoints to date – by entering into strategic transactions that feature an equity component to align incentives with our partners who believe in Betr while helping Betr preserve cash,” Levy concluded.
Two sales in a week
The news of FansUnite’s sale of the Chameleon source code follows on from an announcement last week that it had secured a buyer for its wholly-owned subsidiary and Scottish-licensed online gambling operator McBookie.
After acquiring the business for C$2.2m in 2020, FansUnite agreed a sale of the business for more than C$5m in cash, to an arms length private buyer whose details were not revealed.
Upon the announcement of the sale, FansUnite pointed out that under its ownership, McBookie had delivered three consecutive years of revenue growth, with a gross win increase of 451% and a turnover increase of 305%.
Under the deal, directors Paul Petrie and Damian Walker will continue to serve as directors of the business.
FansUnite said a portion of the proceeds of both sales will be used to repay money owed to investment trust Centurion Financial Trust, reducing the amount of an outstanding loan by approximately C$5.5m.“With both the recent sales behind us, we can focus additional resources towards our highest revenue and margin businesses, such as Betting Hero and the affiliate business,” said FansUnite CEO Burton.
“[Betting Hero is] a dominant operator in the live activation affiliate space, and has added two new business lines to its offering with Hero Hotline and Hero Research.
“Both new segments are gaining traction, and we believe they have the potential to be as successful as the primary business of Betting Hero while driving profitability for FansUnite,” he concluded.