Genius Sports Group is nearing a deal to go public through a merger with DMY Technology Group Inc. II, a blank-check firm led by former EMC Corp. executive Harry You and former Glu Mobile Inc. Chief Executive Officer Niccolo De Masi, according to people with knowledge of the matter.
DMY has held talks with investors about raising $300 million or more in new equity to help finance the merger with London-based Genius Sports, which provides live data to betting companies, said some of the people, who asked not to be identified because the discussions are private. The combined company is set to be valued at about $1.5 billion, one of people said. A transaction could be announced as soon as this week, some of the people added.
U.S. casino operators and digital-betting companies have made a series of investments and public spinoffs this year in pursuit of the online and sports wagering markets in the U.S., pushed in part by the pandemic closures of bricks-and-mortar casinos. Sports betting is now legal in 22 states and the District of Columbia. Analysts predict more states will soon legalize the industry in search of additional tax revenues.
SPACs—or blank-check companies—such as dMY raise money by going public and then have a set period, usually two years, to hunt for an acquisition target. Roughly half of the money raised by initial public offerings in 2020 has been for SPACs, according to data provider Dealogic, and the rush for SPACs has helped make this year the biggest so far for IPO fundraising, already eclipsing the dot-com boom years around the turn of the century.
DMY Technology Group II went public in August, raising $240 million from its IPO and listing its shares on the New York Stock Exchange. As part of the deal with Genius Sports, a group of other institutional and industry investors will take an additional $330 million stake in the company.
The transaction is the second betting-industry deal in less than four months by dMY’s leaders, Niccolo de Masi and Harry You. In July, an earlier dMY special-purpose acquisition company struck a $1.8 billion deal to merge with Rush Street Interactive LP, a Chicago-based online gambling company. Under the terms of that deal, which is set to close this year, Rush’s executive team would continue to oversee the company and Messrs. de Masi and You would join the board.
The two men are also to sit on the board of Genius Sports, whose current senior management would continue to run the company after the deal closes.