Ramy Ibrahim of Moelis & Company sits down with Ryan Knuppel to discuss the past, present, and future of Moelis & Company! He also gives us a sneak peek of the iGamingNEXT panel ‘Public vs. Private’, taking place on March 8th!
RYAN KNUPPEL
Hey, what’s going on everybody? Ryan Knuppel here, Episode 190 of the Knup Sports Show. Thank you so much for tuning in, a lot of you are heading to ICE this week, and actually, our guest is at ICE right now, so we’re going to talk about that here in a little bit. But, we’re excited to have you listening and tuning into today’s show. We have another really special guest for you. I know with the Super Bowl coming up this weekend, we have a lot of sports stuff going on, but yeah, hopefully you’re enjoying it and winding down the football season and heading into whatever’s next with basketball, baseball, and everything else from the sports side, so, alright, without further ado we’re gonna go ahead and bring our guest on today. Today, we got Ramy Ibrahim. Ramy, how are you, my friend?
RAMY IBRAHIM
I’m doing great, Ryan. How are you?
RYAN KNUPPEL
I’m really well, thank you for joining me. I know it’s very busy when you’re traveling. You’re at ICE currently, right?
RAMY IBRAHIM
I am, I just got to London yesterday, got invited to the Tottenham/Man City match, which was a thrill, because, yeah, Harry Kane broke the record for most high score for Tottenham. It was incredible to be there.
RYAN KNUPPEL
Oh my gosh, what a cool experience. I love experiences like that, right? I mean, just something that’s a memory, and then you get to see history along with it. That’s super cool.
RAMY IBRAHIM
And I won my bet on Totten, so that was…
RYAN KNUPPEL
[Laughs]. It never goes that well all the time, right? That’s awesome for you.
RAMY IBRAHIM
Not for me, not for me. Yeah.
RYAN KNUPPEL
Well hey, that’s a good start to the week, and hopefully you have a good rest of your week there at the event, at the ICE event. But thank you for taking a few minutes here, and as you probably already know, we love to focus on great people doing great things in the iGaming industry, and I’m excited to get to hear your story a little bit and really just dive in to what all you’re up to. So why don’t you start by telling us a little bit about yourself, about your background, and kind of path that led you to where you are today,
RAMY IBRAHIM
Sure. So, I’m an investment banker at a firm called Moelis & Company. We are based in New York, our headquarters is in New York, but we’ve got 20 offices around the world globally. I’ve been at the firm about 15 years, and for the last 10, I’ve specialized in gambling and mainly online gaming, so it was an industry that I found love with. Obviously being a consumer of the casino product in Vegas and Atlantic City and everywhere else, to be able to cover that from an MNA and capital markets perspective was just a real treat. So, I spent about 100% of my time covering online gaming of some form or function, whether that be sports betting, iCasino, poker, as well as video gaming, and all that comes under that eco system. My story, with respect to online gaming, is, I think, pretty interesting, at least from my perspective. I’ve been back and forth across our New York and London office. So, I spent 5 years on and off in London, back and forth from New York. When the Supreme Court took on the PASPA case in 2017, this was, I think, the summer of 2017, I was back in New York at the time, and within 30 days, my family and I moved back to London because the firm, the team and I, we made the decision that this case had nothing to do with betting and had everything to do with states rights, so if there was ever gonna be a moment when this market was going to open in the United States, this could be it, so wanted to make sure that we were out in front of that, so moved the family to London again. We’ve gotten great relationships in the US with the land-based casino operators, that’s kind of been our bread and butter and our sense of touch with the firm. Um, but we wanted to make sure that the European online operators who we had started to build a relationship with prior to that, knew that we were not just an American firm, right? That we had boots on the ground in London, and that move turned out to be great because it enabled us to get in front of the who’s who in the category, and if you think about the success in the US market, Ryan, it’s a function of three, maybe four, pillars of the stool, if you will. Legs of the stool, you’ve got the casino operators, that essentially have the keys to the kingdom with market access, not in every state, but in most states, you’ve got the guys that have perfected the art, the technology platform, the product, which pretty much lie in Europe for the most part, they’ve been operating there for, you know, decades in some cases. Um, and then you’ve got brand, which to an American consumer, a brand in Europe may not necessarily resonate with Americans, and so, and then lastly it’s the eyeballs, the audience, the top of the funnel. So, media companies became an important part of that ecosystem, so our thesis was you need all four of these to be successful, and so we went out, we hit the pavement, and luckily got a chance to work on some of the more exciting transactions in the space.
RYAN KNUPPEL
That’s awesome, that’s awesome. Can you name a few that maybe your company was a part of?
RAMY IBRAHIM
Yeah, sure. Yeah, as long as they’ve been announced, I’m happy to. The first transaction we had the privilege of working on was we represented FanDuel on the merger with Paddy Power BetFair, so that was, well, their US business. That sort of form, the FanDuel group that you see today, it was a fantastic transaction for both sides, obviously. FanDuel’s grown to be the #1 operator in the US market. Uh, and at the time, the legacy FanDuel shareholders, they rolled all of their equity into the deal, which obviously turned out to be a great outcome for them because they were able to ride the upside that came on the back of PASPA. So we worked on that transaction, and we also worked on the same transaction two years later in December of 2020, when those same shareholders ultimately sold that minority position to Flutter. So, you know, Flutter now owns 95% of Fanduel, whereas before it was around 60%. We helped the formation of BetMGM, which is #2 or #3, depending on whether you’re looking at sports or casino. We advised Entain on that joint venture partnership. We helped The Stars Group on the formation of Foxbet, which at the time was a landmark deal for media partnership respective. And then fast forward not too long after that, we were working with The Stars Group on their sale/merger to Flutter, which ended up creating the largest public company in the sector. We then worked with Pointsbet, we advised on the sale of the Barstool Sports to Penn National Gaming, which turned out to be a fantastic transaction for Portnoy, Erika, and Jay Snowden at Penn. We did the Sinclair/Bally’s deal that enables Bally’s Sports to be prominent and front and center ever since, so we’ve got quite a few things. And also, interestingly, we’ve done some work in the affiliate space, the online affiliate space. We sold the Action Network to Better Collective, and Better Collective is the largest public company that effectively lead generates, so it’s been a really fun ride, Ryan, and I gotta say that 2018, ’19, ’20, and ’21 were phenomenal from a [inaudible] perspective. 2022 became a bit of a choppy market, as you know, the market in general kinda crapped out, but online gaming in particular, and especially those in the US, they kind of fell from flavor, fell from glory, but so far in ’23, things are starting to pick back up, so hopefully we’ll get a chance to work on a few more transactions over the course of the year.
RYAN KNUPPEL
Well that’s exactly where I was going to head with the next question, is, you know, and congrats on some of those deals, I mean, those are some of the biggest in the space and anybody that’s close to iGaming and close to what’s going on, those are some of the biggest deals around, so congrats to you and your company for really playing a big part and really shaping what we know as iGaming in the US, which is really cool. But that’s kind of where I was gonna lead next, especially, you know, maybe, I work a lot more on the affiliate side and the media company side, and I know right when the US kinda started going, there was all these affiliate companies and media sites and all these sites that were kinda looking to get gobbled up, looking to get acquired, and I feel like that, I feel from outside looking in, that that’s kinda, for lack of better terms, dried up a little bit, or there’s not as much appetite there to acquire these companies. Can you shed some light on just, I guess, the appetite? Is it still there for companies, bigger companies acquiring maybe smaller affiliates or smaller media sites?
RAMY IBRAHIM
Yeah, no it’s a great questions. So, I’ll address that from maybe two vantage points. One, from the online operators who use these guys on a regular basis, it’s part of their core business, there’s probably different schools of thought on how effective online affiliates are, but the ones that do it really, really, really well, it’s fantastic for acquiring new customers and, frankly, retaining those customers with content, etc. So from the operators’ perspective, there will always be a need, and there will always be a market for online affiliates. Period, full stop. From the other side of the table, in terms of, you know, content, media, and the ability for a company, let’s take Bleacher Report, I’m just picking on them, when you have that kind of traffic, when you’ve got that kind of engagement, when you’re always producing fresh content that people actually like to go back to, those are very, very valuable assets. So, a lot of companies have a tremendous amount of content, they are fresh and innovative in the way that they produce said content and deliver it to fans, but have never really become an affiliate, not in the way that affiliates exist in Europe, so a lot of them over the years have said “Hang on, wait a second, we’ve got all the eyeballs, we’ve got all the content, why don’t we just flip on the affiliate switch? Why don’t we a CPA, a cost per acquisition, why don’t we get a piece of the revenue that you, Ryan, are gonna lost with FanDuel this year betting on your favorite team?”. So, I would say that there’s still a tremendous amount of appetite from some of the larger guys, and even media guys, think of the traditional media guys that are looking at these sites and the companies that own these sites and say “This is a really nice bolt on acquisition for what. we do, and in fact, the capability that these teams have, particularly from an SEO perspective, if we can take that kind of secret sauce and apply to what we’ve built, well maybe we can have a really interesting business.” And that’s exactly what’s happened. I mean, Better Collective and Action Network has been a great transaction for the both of them. You know, you go to Action because you want the ESPN/Bloomberg analysis of betting and data, and, you know, because of that consumer that goes there, you know that he likes betting, you know that he likes analytics, to be able to convert that customer, you provide him with something that he values and he’s providing the operators with customers that you know are going to be worth a lot over the lifetime of that player.
RYAN KNUPPEL
Amazing. Well, thank you for that insight. Yeah, I totally agree. There’s still appetite there and those big players certainly are always looking to get more eyeballs on what they’re doing, so affiliates can definitely help with that in some of these sites. I mean, content is king in that space, right? And some of those sites are putting out lots of engaging content. Let’s shift focus here just a bit, because I know you’re at ICE currently, but you’re gonna be speaking at iGamingNEXT in New York City come early March, correct?
RAMY IBRAHIM
That’s right. I’m looking forward to it.
RYAN KNUPPEL
Awesome, and I know, I’m looking forward to it too. Um, and it looks like the panel you’re on is called Public vs Private. So let’s, I don’t want to spoil what all is going to happen on this panel because I think everybody should listen to it, if you’re not going to that conference, make sure you’re going. But I want a little teaser, a little teaser of what this public vs private discussion is gonna be like from you and the other panelists that are on there.
RAMY IBRAHIM
Sure. It’s been age-old question, you still there?
RYAN KNUPPEL
Yep, yep I’m here. No, I’m here, I just pulled up the site with it along with it.
RAMY IBRAHIM
Oh, okay. Cool. Uh, age-old question is “Is a company better off being private or public?”, right? And that question will always exist and there will always be differences of opinion. There’s no one size fits all to answer that question. Um, when you think about this category in particular, online gaming and sports betting, and I’ll separate it from Europe or the rest of the world and US. What happened initially when the repeal passed back in May of 2018, as you recall, Ryan, DraftKings, they kind of just broke the door open and did pull off one of the most incredible SPAC transactions. SPACs have been around for a very long time. That one was, you know, it was the best of the best for a very long period of time. It was well timed, it was well executed, and it gave DraftKings a public currency that no one else had in the US. If you were an investor, whether a retail investor or any [inaudible] investors, you had no way to play the US opportunity except for DraftKings, and that gave them a distinct advantage, and as you recall, Ryan, their share price went from X to Y to 10x to, and it was just a great story, and at the time the market was looking for, because it was early, how big was the TAM, the total addressable market, and what’s the market share, DraftKings, that you guys are gonna be able to capture, and so those were the two things that investors fed off of, and the participants of the market, the operators, they were feeding the investors what they cared about, which is, “This is gonna be a huge opportunity, we’re spending for the future, and we’re investing so that we can have an ultimate material amount of market share”, because at the end of the day, that operational leverage will take you to profitability, and then you’ll look like a lot of the guys in Europe that generated a boatload of cash flow. And when you have a public currency, it not only creates, you are well recognized across the street, you’re there for investors to come in and out of the stock, it just creates a lot more visibility, if you will, and that’s generally a positive thing when things are going really well. You’re able to attract and retain talent, because at private companies it’s a little bit more difficult, because you never know when you’re gonna have an exit, and so the ability for you to offer stock options, for you to provide key employees with these options and ultimately get some liquidity, it brings everyone along for the ride. And then there’s MNA. If you’ve got a deal that is a really, really big buy, and you can’t finance in cash, particularly in a market like this one where you’ve got a very challenged public capital markets, both equity and debt, the ability for you to do transactions with stock provides you with a significant advantage to being a private company. So there’s a whole lot of things that are positives, but equally, flipside is, when you’re no longer the talk of the town and things start to get a little challenging, investors, the market can turn on you very, very quickly, which puts you in another way to manage a business, and I think you’ve seen DraftKings just laid off a percentage of their workforce, as have a lot of people across the industry, including tech and everything else, that’s just the market and the world we live in, unfortunately. Um, if you’re private, and remember, if you’re a public company, Ryan, you’ve got earnings call, it basically, so you know, you get a breather for five days, and then it’s the next earnings call, and so what’s gonna be my story, have I delivered on what I told the market, so you’re always in that three month cycle where you’ve got to continue to deliver, and put up points, and answer some very difficult questions. So, it’s fantastic for many companies, but it’s not great for all companies. If you’re private, you get the benefit of doing everything below the radar, you don’t have the pressure of the quarterly earnings calls, you don’t have an analyst that is asking you those questions that you, Ryan, definitely don’t want to answer when you’ve got 300 people on a call, and it enables you to be a lot more long-term thinking. And I’ll give you a perfect example. Two companies right now that are private that have the benefit of that long-term thinking, you’ve got Hard Rock Digital, who are taking their time, building their product that they’re proud of, and they’ve got an enormous database and a phenomenal brand globally, but particularly in Florida, and depending on where things shake out in the courts there, you should assume that they’re gonna be on the map, but they don’t have the public shareholder, they don’t have those earnings calls, and so they can think about “Where do I wanna be in 5 years?”, not “Where do I need to be next quarter?”. Fanatics, I know you’ve heard a lot coming out with Fanatics, they also have that same benefit, right? They brought Matt King over from FanDuel, he’s been there, he’s done that, and Michael Rubin has expressed his ambitions, and so they’re able to think about product, innovation, you know, how are they going to leverage their customer base, and so there are a lot of benefits of being a private company. Now, at the end of the day, Ryan, I think when you are a business that gets to a certain size and scale, naturally becoming public or going public has to be part of the discussion in every board meeting, but timing that to where you get all the benefits that I talked about and more and are willing to forego some of the things that you benefitted from as a private company. Now, if you’re strategy’s already intact, if you’re executing on that, being below the radar doesn’t necessarily matter to you anymore because it’s just more of the same bigger, better, faster, stronger.
RYAN KNUPPEL
Amazing. Man, this is gonna be a great panel. So, 11:05, Wednesday, March 8th, we’re gonna hear a lot more from you then, Ramy, I’m sure. Man, sounds like an actually great conversation is gonna be had there, so I’m excited for that one.
RAMY IBRAHIM
Well, thanks for having me on, Ryan. I really do appreciate it.
RYAN KNUPPEL
Sure. You know, before I let you go, I know you’ve gotta get going, I always like to leave it open. Any last words, anything we missed, anything you want to say, or maybe reaching out to the people listening to this and need something, or just anything at all that you wanna end with here before I let you go.
RAMY IBRAHIM
Yeah, um, this is not a, you know, this message goes out to those that are 21+, if you haven’t gotten a chance to enjoy a game, whatever sport you love, whatever team you love, with having a little bit of skin on it, a little bit of action on it, you know, $20, $5, whatever makes sense for you, just feel the difference in how much more entertaining that game is. Take the Super Bowl, if you’ve never placed a bet. And part of the reason that I think this industry is gonna continue to be so successful as long as the operators don’t swing the pendulum too much with bombardment of advertising, it’s a really a fun way to engage as a fan and as a consumer of sports to get into placing something on your favorite team. Anyway, this is not an endorsement to become a gambler, and I am saying that this is an exciting moment in the United States because we can now do this legally, we can do it safely, and there’s a lot of great product out there, so if you haven’t given it a try, I encourage you to do so.
RYAN KNUPPEL
Awesome, well thank you so much for being here, Ramy, and I’ll let you go, let you get back to your conference and have a great week. I wish you all the success in the world, and hope to have you on in a few years and talk about all the other deals you helped bring to fruition here in the industry. So thanks for being on, my friend.
RAMY IBRAHIM
Thank you very much, Ryan. A pleasure. Take care.
RYAN KNUPPEL
Take care.
Alright, that was Ramy Ibrahim, Moelis & Company. Wow. What a knowledgeable individual in this growing and emerging industry. I urge everyone to get out there to iGamingNEXT. Wednesday, March 8th, he’s speaking 11:05 EST, Public vs Private. That is gonna be really cool. If you haven’t gotten your ticket yet, if you haven’t gotten your iGamingNEXT ticket you can get it, I have a promo code, KNUP10, 10% off, I’d love to see you there, I’ll be there as well. I’d love to meet up with anybody that’s gonna be there. It’s gonna be an amazing event here in a mont or so, I guess we’re only a month away from that, that’s crazy, time flies. So, excited for that. Thank you so much for tuning in, that’s it for today. That was 190, Episode #190 is in the books, and we’ll see what happens from here going into the future. Alright, enjoy the Super Bowl, enjoy everything you have going on in life, and take care. Stay safe. I’m Ryan Knuppel, checking out for today. Take care. Bye-bye.
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