Shares of Score Media and Gaming Inc. (OTC:TSCRF) slumped in the US Thursday, after the Canadian sports betting and media company revealed it sold 38.5 million shares of stock in a secondary offering, raising $25 million in the process.
Regardless of industry, equities usually decline on news of secondary offerings, because the influx of new shares dilutes current investors. Score Media, which operates theScore betting platform, is granting underwriters of the stock sale the option to purchase another 5.77 million shares for up to 30 days following the initial sale. If that happens, the capital raise would jump to $28.8 million.
theScore intends to use the net proceeds from the Offering for working capital and general corporate purposes, including funding the continued growth and development of its gaming operations in the United States and Canada,” according to a statement issued by the Toronto-based company.
Following snap back rallies in share prices after the March coronavirus equity market tumble, several sportsbook operators, including Flutter Entertainment (OTC:PDYPY) and William Hill (OTC:WIMHY), headed to capital markets with new share offerings. While the initial reaction to the news was mixed, analysts are mostly enthusiastic about the capital raises, because operators are taking advantage of higher share prices and bolstering coffers for US expansion.
Lowdown on theScore
In early June, shares of Score Media surged for no apparent reason, stoking chatter that the Canadian company was a potential takeover target.
Executives haven’t commented to that effect. However, as sports betting grows in the US, operators continue looking for media partnerships. Making theScore potentially attractive to suitors is that it combines both of those offerings under one roof.
Earlier this week, the company said it received approval from the Colorado Division of Gaming to offer mobile and online sports wagering services in the Centennial State. Sports betting debuted there on May 1, and first- and second-month handles have been decent when considering the limited sports calendar operators contended with for much of the June quarter.
“theScore Bet secured market access to offer mobile sports betting in Colorado via its previously announced agreement with a subsidiary of US gaming operator Jacobs Entertainment Inc.,” according to the company.
Last year, theScore landed approval to operate in New Jersey, the largest US sports betting market. In the Garden State, the operator has one of three skins for Monmouth Park.
In addition to Colorado and New Jersey, the Canadian company recently landed received GLI-33 certification for its Indiana app. In the Hoosier State, theScore will act as the skin for Penn National Gaming. Indiana is one of the fastest-growing sports betting destinations in the country.
Like rival operators, theScore is benefiting from the return of traditional sports. In a recent investor presentation, the company said the handle from the first week when Major League Baseball (MLB) was back was comparable to its handle during Super Bowl week.
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