Light & Wonder Cashes In On Sports Betting Sell-Off

Light & Wonder Cashes In On Sports Betting Sell-Off

Light & Wonder ($LNW) will be getting less than anticipated from the sale of its sports betting arm, OpenBet. The company announced it would accept $800 million instead of $1.2 billion from Endeavor Group Holdings, Inc. ($EDR). Continuing forward with the deal shows L&W’s commitment to focus on online casinos.

The deal is expected to close sometime in Q3. 

About the new Light & Wonder contract terms

Light & Wonder announced it sold OpenBet to Endeavor for $1.2 billion in cash and stock last September. Under terms of the new deal, L&W will receive $700 million in after tax-proceeds. 

In a statement, L&W said:

“Under the terms of the amended purchase agreement, Light & Wonder will receive $750 million in cash and $50 million in Class A common stock of Endeavor Group Holdings, Inc., based on volume weighted average price of such stock in the twenty days before the date of the amendment.”

Debt relief is still a priority from Light & Wonder

Debt relief is the primary reason L&W’s decided to ditch its lottery and sports betting divisions. Selling off both businesses has helped the company reduce its debt almost in half.

“The recently completed Lottery sale and the pending sale of Open Bet will cumulatively generate approximately $5.6 billion of estimated net after-tax proceeds,” the company said in a statement. 

In April, the company said it has been able to shrink its debt to $4 billion, down from $8.8 billion. Since the company’s transformation, it has reduced its net debt leverage ratio to 3.7x from 6.2x. 

L&W CEO Barry Cottle said:

“The significant cash consideration from the OpenBet sale will enable us to further de-lever our balance sheet and acheive our Targeted Net Debt Leverage Ratiorange of 2.5x to 3.5x.”

A lower leverage ratio positions the company for a credit upgrade in the future. Higher credit ultimately means L&W can issue debt with lower interest rates. 

During the company’s first-quarter earnings call, the Las Vegas-based slot machine and table game manufacturer said it would focus on land-based casinos and online gaming.

The company hopes to have at least $10 billion in available capital by 2025.

Author: Tyler Gutierrez