Golden Knights’ Bill Foley gets closer to gaming industry with $9B deal

Bill Foley is betting billions on the future of online gaming.

On Monday, the Vegas Golden Knights owner’s blank check company, Foley Trasimene Acquisition Corp. II, announced plans to merge with Paysafe Group Holdings Ltd., an online payments processing firm that has numerous big-name clients in gaming.

The transaction — valued at roughly $9 billion — is one of the largest blank check mergers to date and is expected to close in the first half of next year.

Foley wants to see Paysafe “dominate” the online gaming, or iGaming, industry and strengthen its ties to Las Vegas-based operators. He plans to have conversations with the leaders of local casino companies — many of whom he already has ties to, thanks to the Vegas Golden Knights — to lay out Paysafe’s initiatives.

“I have a vision that we should be the (digital) wallet, have tie-ins with every major casino company that’s headquartered or located in Las Vegas,” Foley said. “There will be money to be made for everybody. That’s why I got so excited about Paysafe — its position in iGaming is really second to none.”

Potential in the iGaming space

Paysafe, a London-based specialized payments platform, went private after accepting a nearly $4 billion offer from private equity firms Blackstone Group Inc. and CVC Capital Partners Ltd. in 2017. The company offers e-cash payments and digital wallets — which are popular among online casino customers — and allows companies to accept online payments. Clients in the gaming industry include William Hill U.S., Draftkings, Scientific Games Digital and Caesars Entertainment Inc. subsidiary, Caesars Interactive Entertainment.

Once the merger is complete, Paysafe will become a publicly-traded company under the name “Paysafe Limited” and plans to list on the New York Stock Exchange under the symbol PSFE. CEO Philip McHugh will continue his current role in the combined company, and Foley is set to become chairman of its board of directors.

“It’s a good opportunity for Foley and shows that he has an opportunity to play even in another space in Las Vegas and a greater expanding world,” said Brendan Bussmann, director of government affairs for Global Market Advisors. “We continue to see that iGaming and sports betting is a growth area for the industry.”

Paysafe has already captured a large share of the U.S. iGaming market since its 2013 launch. Today, it serves more than 60 operators in the country, roughly 75 percent of the market. Foley hopes to see that number grow as iGaming and sports betting continues to expand across the country.

“Whether it’s a lottery or slot machines or sports betting (opening in a state), it’s our job to be there first and to make sure we dominate,” Foley said. “We’re focusing on gaming, particularly sports betting, in the United States as it becomes legal. … We’ve got a wide landscape we can attack. It’s pretty exciting.”

Sports betting has accelerated its growth across the U.S. since 2018, when the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act, a 1992 law that prohibited the expansion of sports betting to other states. According to the American Gaming Association, 19 states and the District of Columbia now offer live, legal sports wagering. Six states are legal but not yet operational, and another four have filed or pre-filed legislation to legalize sports betting.

McHugh said he and other Paysafe executives have already had discussions with Foley on how to grow the business two to three times its current size.

“We do see the opportunities for omnichannel, being able to create experiences both online and in store, in casinos. Ultimately, that’s where you want to go, is have in-casino experiences,” McHugh said. “You have to have great technology, great security, to allow that to happen. But Paysafe’s up to it.”

Foley said Paysafe will do more for casinos than just enhance players’ sports betting experience. He said the company’s digital wallet will allow casino customers to purchase almost anything within the casino electronically, from dinner and room service orders to in-play sports bets.

Paysafe does work with other industries, but gaming makes up about 30 percent of its business.

“We think we’re well positioned to win this market, to continue to be a leader in all the markets we serve,” McHugh told the Review-Journal. “As each state continues to grow, as new states expand and as our digital wallet starts to grow and capture more share, you see both volume and take rate on an upward trajectory over the next few years as this market develops.”

According to a third quarter report from the American Gaming Association, iGaming generated $435 million in the quarter, up 234 percent from the same period the year prior. At Paysafe, the iGaming market volume was estimated to be $3.4 billion in 2019, and is now projected to reach $47 billion in 2025.

The age of SPACs

While 2020 has been a challenging year for many companies, it’s shaping up to be a pivotal moment for special purpose acquisition companies — SPACs — like Foley Trasimene Acquisition Corp. II.

SPACs are companies with no commercial operations; they’re formed solely to raise money through an initial public offering to acquire an existing, operating company. Foley Trasimene Acquisition Corp. II, for instance, had been targeting businesses in financial technology or information and business services.

The operating companies get to undergo a faster IPO process by merging with a SPAC, while the founders behind the blank check company get a stake in the newly acquired company. Major companies like Virgin Galactic and Draftkings have gone public through SPACs within the last two years.

McHugh said SPACs have emerged as an efficient way for companies to go public, but added that not all SPACs are equal. For Paysafe, Foley’s involvement was what really sealed the deal.

“The difference maker, hands down, was the opportunity to partner with Bill,” McHugh said. “Bill’s history, his reputation to market, his focus on being able to consolidate and drive growth and drive value with a management team is pretty unparalleled.”

Monday’s acquisition is Foley’s latest blank check merger. Earlier this year, a Foley-led SPAC acquired Des Moines-based insurance company Fidelity and Guaranty Life — previously unrelated to Fidelity National Financial Inc., which Foley chairs — for $1.84 billion. Another SPAC, Foley Trasimene Acquisition Corp., went public earlier this year.

Contact Bailey Schulz at bschulz@reviewjournal.com. Follow @bailey_schulz on Twitter.