Taking Tekkorp to the top22nd December 2020 10:37 am GMT
Tekkorp CEO Matt Davey was made for this job – and he knows it. Together with Robin Chhabra he is ready to launch its first company on Nasdaq. Their track record suggests it will be the first of many.
“I love mergers and acquisitions. I love capital raising. I love the public markets,” Matt Davey tells Gaming Intelligence from his home in Las Vegas. “I love that stuff. I also love building businesses.”
He took NYX Gaming from five people to 500 before selling it to Scientific Games for CAD$775m (€500m) in January 2018. And it was all on the back of doing “that stuff”. During the past year he has built a team around him that is equally expert in doing that stuff.
Notably, he has signed the talents of Robin Chhabra, former chief business development officer of William Hill and The Stars Group. Chhabra features alongside Davey in this year’s Gaming Intelligence Hot 50. It is the former’s fourth appearance in the list – an honour he shares with just two other people; GVC Holdings CEO Shay Segev and his former boss at Stars, Rafi Ashkenazi.
Davey makes his third appearance in the Hot 50. It might have been more if he hadn’t disqualified himself one year by assuming a role on the judging panel.
Gaming Intelligence tries to keep the Hot 50 fresh by having an unwritten rule that you cannot appear in the list in successive years… except under exceptional circumstances. Chhabra’s departure from Flutter and the dream team he has formed with Davey make these exceptional circumstances.
If you are looking for deal doers then these two are about as good as it gets in this industry. What’s more, Davey has enlisted his former CFO at NYX Eric Matejevich as chief financial officer. Before joining Davey at NYX, Matejevich was CFO at Resorts International, working for Davey’s business partner and Tekkorp chairman Morris Bailey, who also happens to own Resorts.
“We can bring real operational credibility. In today’s market money is fairly cheap, it’s pretty accessible, so anyone can write a cheque. But can you add value to the management team and the shareholders,” asks Davey, in the sure-fire knowledge that his team’s track record is pretty much unchallenged in any other investment house.
He has also enlisted former Caesars CEO Tony Rodio, Ernst & Young’s former head of global gaming Tom Roche and Sean Ryan, who headed Facebook’s forays into gaming during the past decade. Most bases are covered.
Tekkorp was originally just a dormant company that Davey used to hold his NYX shares. But he obviously liked the brand and has used the email address for some years. However, it was not until he left his role as SG Digital chief executive that it was finally put to good use.
He has invested in about a dozen companies over the past 18 months. Successes include the recapitalisation of Australian data analytics company BetMakers, which he helped grow from a AUD$20m company to one worth AUD$300m in just 12 months.
BetMakers had pivoted from its business model as a midsize sports betting operator to become a data analytics and pricing supplier, focusing on the horse racing industry. “The market didn’t understand the pivot,” explains Davey. “Horse racing is a misunderstood segment. It is actually the second largest category of sport in the world.”
Davey also became a strategic investor in Swedish-listed company Scout Gaming Group. “In the US you have two market leaders, DraftKings and FanDuel. Neither make money, so the unit economics are not attractive. I always thought a B2B model – which cuts player acquisition costs and provides great technology and a pooled betting experience – is a good model.”
The share price is up almost 300 per cent since the SEK36m share issue in January 2020.
Launching a SPAC
These deals were good but Davey has always been ambitious and realised that a big deal, where Tekkorp acquired a whole company, needed partners. Hence, the formation of his dream team and a focus on special purpose acquisition companies (SPACs).
There are around 160 SPACs on the market right now, more than ever before, but Davey explains that their rise has been accompanied by a huge decline in listed companies, from around 8,000 listed US companies in the early 2000s to around 4,000 now.
“There is a lack of investable assets for the public market to invest in,” he continues. “The SPAC model is doing a great service to the investment community because it is bringing forward interesting businesses that previously the public could not invest in.”
DraftKings is the most obvious example. But DMY Technology’s Genius Sports Group and Rush Street Interactive listings have followed in their wake.
Tekkorp announced its $250m initial public offering in October and Davey, Chhabra and co are in the process of talking to business owners to see whether Tekkorp can assist.
“iGaming and sports betting is one of those sectors that has spectacular growth built into it. The migration from land-based consumption to online is driving this growth. At the same time, you are accelerating that by opening up state by state in the US. So it is attractive to public investors.”
But it is also very competitive for operators and suppliers, so they need cash. It is a virtuous circle that Tekkorp is here to help with. There can be few better guiding lights than Davey and Chhabra.