Kambi on building the future of esports betting – M&A

Kambi’s acquisition of Abios marks a pivotal move in the rapidly evolving esports landscape. Chief Operating Officer Erik Lögdberg elaborates on how this strategic partnership enhances Kambi’s robust foundation in traditional sports betting while tapping into the untapped potential of esports.

The acquisition of Abios – an esports data and technology provider valued at up to SEK 270 million (£22.6 million/€26.4 million/$31.1 million) – is a significant step forward for Kambi, aimed at positioning the company as a leader in a sector that remains in its nascent stages.

“Our decision to acquire a company with deep esports expertise stems from the recognition that this market is still developing,” Lögdberg asserts. “The competencies that Abios brings to the table are invaluable as we look to innovate.”

Kambi’s robust trading infrastructure—characterized by a dedicated team proficient in odds creation and algorithm development—will synergize with Abios’ specialized knowledge of esports data management.

“We aim to leverage our risk management and trading capabilities, while integrating Abios’ niche expertise in esports, to create a more efficient, automated live betting product,” he explains.

“It’s not merely about increasing the volume of esports offerings, although that will occur; instead, our focus is on enhancing the quality of the user experience.”

The Esports Opportunity

The esports sector has emerged as a beacon of opportunity in the gambling industry, especially in light of the COVID-19 pandemic, which catalyzed a surge in interest and participation. Lögdberg notes that Kambi’s esports offerings not only held steady but thrived during this tumultuous period.

“Kambi has been providing esports betting options for approximately five years. We saw significant growth during the pandemic, and that momentum has persisted post-return of traditional sports,” he states. “Market forecasts suggest that esports betting could double in size within the next five years.”

This optimism aligns with Kambi CEO Kristian Nylén’s observations regarding the esports category, indicating that it has been a focal point for Kambi’s strategic planning well before the Abios acquisition.

Lögdberg emphasizes that while no other deals were specifically in sight, Kambi’s robust cash reserves positioned it to pursue opportunities that support its existing portfolio.

“We have always maintained a strategic approach to M&A, looking for complementary businesses that can enhance our offerings,” he says. “Now, with our platform opening up for outsourcing and acquisitions, the timing has never been better to integrate a company like Abios.”

Interestingly, this acquisition coincided with a challenging period for Kambi, including the announcement from major client Penn National Gaming about transitioning to its own sportsbook technology. While this transition may seem counterintuitive, it underscores Kambi’s proactive approach to diversifying its portfolio.

“Such acquisitions require time and planning, and while recent events may seem related, our focus remains on enhancing our quality and distinguishing ourselves from in-house solutions,” Lögdberg asserts.

Enhanced User Experience

Beyond trading capabilities, Abios brings a strong emphasis on user experience through innovative features aimed at boosting customer engagement—an area where Kambi has traditionally placed less focus.

“Historically, our esports offerings have not concentrated on user experience,” Lögdberg admits. “However, Abios has successfully collaborated with many of our partners to develop user interface components that enrich the betting experience.”

While Kambi’s primary emphasis remains on trading for traditional sports, Lögdberg suggests that they may explore further user experience enhancements through potential acquisitions rather than in-house development.

“We believe in maintaining a strong focus,” he continues. “While other organizations are exploring user experience in traditional sports, we prefer to concentrate on trading excellence while considering M&A for supplemental capabilities.”

This strategic positioning raises an intriguing question: As esports betting continues to mature, will it diverge significantly from traditional sports betting? Lögdberg acknowledges the uncertainty but highlights the expertise brought by Abios.

“While I can’t predict the future, we have engaged the right experts who can offer insights into how these domains might evolve,” he notes. “There are compelling indications that user experiences may differ, particularly as younger audiences interact with betting platforms in varied ways, which could also influence traditional sports.”