Champion Gaming Completes Funding With Reverse Merger on Horizon
Champion Gaming, a group led by former HBO Sports president Ken Hershman, is building the latest publicly traded sports betting company, a subscription service that plans to focus on data, analytics and video content.
The group is in the process of completing a reverse merger with Prime City One Capital Corp. (TSXV: PMO.H), a shell company listed on the TSX Venture Exchange. For a proposed $595,000 (CAD $750,000) worth of stock, Champion Gaming is taking over Prime City. This week the group closed a funding round of $3.65 million (CAD $4.62 million), giving it a roughly $12.3 million post-money valuation, and it is on track to begin trading in a few weeks.
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Champion Gaming plans to build a data and media service to help sports bettors build strategies, evaluate experts and make better-informed wagers. The group’s first move was an acquisition of EdjSports, parent of popular analytics platform Football Outsiders, which was finalized this week alongside the private placement. The funding will be used to help with the reverse merger, the EdjSports deal, and future business needs.
It’s a pick-and-shovel approach in what is quickly becoming a massive business in North America. The rapid expansion of legal sports betting in U.S. states and Canadian provinces has unlocked billions-worth of opportunity, and not just for the consumer-facing operators.
“The sportsbooks are all well-capitalized, same with the data mining companies like Sportradar and Genius Sports,” Hershman, Champion’s CEO, said in an interview. “So we kept looking for our own avenue.”
Champion’s revenue will come from both business- and consumer-facing products, according to Hershman. The subscription service will be the early priority, but there’s also advertising, sponsorships and licensing opportunities. Down the line, the company expects to develop an affiliate program, in which it can make money for referring new customers to sportsbooks.
Affiliate businesses, at the top-end, are a huge market opportunity. Better Collective, which recently bought Action Network for $240 million, does about $153 million in annual revenue, according to data from Gambling Compliance. Catena Media is the second largest at slightly more than $141 million.
To grow, Champion needs to expand beyond EdjSports’ NFL roots. It recently struck a strategic partnership with Inpredictable, a sports analytics website with particular strength in the NBA and WNBA. Champion is also partnering with SharpRank, which evaluates touts and media experts on their sports betting picks. (Hershman called the Inpredicatble partnership an “exclusive licensing arrangement” but declined to comment on the specifics; he said no money was changing hands with SharpRank). The company has its sights on golf, combat sports, tennis and NASCAR as well.
The company is also looking to expand its media operations. Content has become critical currency for nearly everyone in the sports betting ecosystem, and Champion wants to develop video, both for its subscribers and to license in overseas markets in Europe and Asia.
“We know that we need to even out our revenue model, so that we don’t go off the NFL cliff at the end of February and don’t come back until the end of summer,” Hershman said.
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