The Nevada Gaming Commission on Thursday will license Israel-based NeoGames after the Gaming Control Board on Wednesday recommended approval during a special meeting.
The Board recommended a license for the company to operate as a manufacturer and distributor in Nevada and signed off on the licensing of its executives.
The hearing came three days after Aristocrat Leisure announced that it’s acquiring NeoGames for about $1 billion. Aristocrat said the takeover would give the company an entry into the ilottery market and pave the way for further penetration in online-gaming verticals.
NeoGames CEO Mordechay Malool told the Board Wednesday that the enterprise value of the deal is $1.2 billion when factoring in debt, while the equity value is $1 billion.
“Aristocrat and we have sent a message to the market that the deal will close in about 12 months, because of the large number of jurisdictions we hold licenses in and gaming regulators need to give their opinion on the deal in Europe and 20 jurisdictions in the U.S. and two in Canada. We hope the process won’t take that long, but we gave ourselves enough runway to complete it.”
Being acquired by Aristocrat will help smooth out that regulatory process.
Malool said NeoGames was founded in 2014 and is a spinoff from Aspire Global, a business-to-business gaming company operating in Europe. They launched their first U.S. customer in 2014 with the Michigan lottery and now have five North American customers: New Hampshire, Virginia, North Carolina, and the Canadian province of Alberta.
NeoGames has 1,100 employees in eight main locations around the world. Half of its management team resides in Israel and most of the other half is in Europe. It has customers in Europe, Africa, North America, and Latin America and works in 50 regulated jurisdictions.
“It’s exciting for Nevada to have such exposure to international and global companies,” said Board member George Assad.
In 2015 about a year after NeoGames was formed, William Hill came in as an investor and acquired 30% with a $25 million injection.
“They were only a shareholder and a very good shareholder,” Malool said. “They were looking for technology to boost their proprietary sports-betting solution connected to our player-account management. We were very honored they selected us as their technology partner and signed a deal with us. Since then, we’ve been supporting them to the best of our ability for what they call the Liberty solution that they deploy across 20 states already and Ontario in Canada.”
When Caesars Entertainment acquired William Hill, it kept the technology agreement with NeoGames and retained their shares, but later divested of their holdings, Malool said.
In March, NeoGames signed an extension of an agreement with Caesars for three years with one-year options, Malool said.
Guidance given to the market for revenues in 2023 for NeoGames was $235 million to $255 million. The sports-betting segment makes up about 10%, while ilottery is the dominant revenue.
NeoGames has an application pending in Indiana that’s set to be heard in June. It has a temporary license in the state.
Few concerns were raised during the hearing, though Board member Brittnie Watkins asked about regulatory violations in Belgium, Sweden, and the UK.
The company said a license by its Aspire Global has been surrendered in Sweden, given that the structure of the regulations and marketing activities “didn’t make any sense commercially” to hold one.
In the UK, Aspire Global was fined for due diligence of business partners, but that has since been restructured to meet concerns raised by authorities, Malool said.