Bookmakers Black Type and Redzone in Advanced Talks Over Merger.
Industry insiders believe that UK online betting sites Black Type and Redzone are close to agreeing to a merger which will see the companies combine. Sources state that the two bookmakers have signed a memorandum of understanding which will see Black Type acquire Redzone. However, Redzone would become the majority shareholder under the terms of the deal.
The two brands would merge to create a new company called Redzone.bet.
The deal is seen as a way of ensuring steady income streams as Redzone sees a surge of betting activity in the winter NFL months, whereas Black Type revenues are greatest in the summer months due to the popularity of horse racing betting.
The merger is expected to enable the new company to negotiate more favourable platform fees due to the combined resources of the two bookmakers. And while there is no news on which platform the new venture will use, current providers SBTech and FSB are believed to be in the running.
The two companies currently trade on different licenses with Redzone operating on the Argyll licence and Black Type uses FSB’s license, but if the merger is successful the new company will use a new license that Black Type acquired recently. FSB’s UK license has been investigated recently by the Gambling Commission, however Black Type is not one of the operators being investigated.
Although talks are advanced, the deal is dependent on Black Type’s ability to complete the third round of funding, if successful it is believed that the merger could be completed at the end of the current NFL season which runs until February.
As well as reducing operating costs and lowering platform fees, the two companies believe that the increased revenue streams will enable the new company to realise expansion plans with the American market being of interest. RedZone plans to leverage its extensive pricing knowledge and plans to create a new business-to-business arm called Redzone data. A source close to the ongoing negotiations has said that Redzone is already in talks with potential partners, including several US casino brands.
Another B2B venture expected if the merger goes through is the creation of RedZone Risk, which will be an insurance division of Redzone.bet, By creating RedZone Risk, they will be able to evaluate the risks of the company’s subsidiaries, write policies, set the premiums and ultimately either return unused funds in the form of profits or invest them for future claim pay-outs.