Shareholders of Toronto-based Score Media and Gaming Inc. voted in favour of a share consolidation resolution on Wednesday in a move aimed at helping the company list on a U.S. stock exchange.
The resolution will allow the company to consolidate shares within a range of one new share for between two and 20 existing shares. The range gives the company flexibility to consolidate as much as it needs to meet the minimum share price needed to be listed on a U.S. exchange, which could create the opportunity to raise significantly more capital.
The company, known as theScore, provides sports news and information to users of its mobile app, which has about four million monthly active users. In September, 2019, the company launched ScoreBet, an online betting platform currently available in three U.S. states: Colorado, New Jersey and Indiana.
A source close to the company confirmed that it will expand to the state of Iowa in the near future. The Globe and Mail is not identifying the source because they are not authorized to speak publicly about the expansion.
TheScore’s stock has seen rapid growth in recent months, with investors on the online forum Reddit hoping that one of two bills before Parliament that would decriminalize single-game betting in Canada will pass, opening the Canadian market to sports betting operators. Currently, sports bets in Canada must include at least two events in a single wager, commonly known as parlay betting.
Despite the approval of the resolution, shares of Score Media fell 4.8 per cent after the vote on Wednesday to close at $4.99.
In 2019, U.S. casino giant Penn National Gaming Inc. bought a US$7.5-million equity stake in the company, and struck a 20-year agreement that provides theScore access to sports betting markets in 11 U.S. states where Penn National operates casinos and racetracks.
Eighteen U.S. states and the District of Columbia allow single-game sports betting.
There are two bills before Parliament that would decriminalize single-game wagers and allow provinces and territories to select private operators to enter their respective markets. Bill C-218, a private member’s bill brought by MP Kevin Waugh of Saskatoon-Grasswood, has received support from the Liberals, Conservatives, Bloc Québécois and the NDP. The House will vote on the bill on Feb. 17.
Mr. Waugh told The Globe and Mail that he is unsure whether his bill will have enough support to pass next week, adding that he will need votes from the Liberals, who introduced Bill C-13, which also decriminalizes single-game sports betting - except for horse racing - in November. TheScore has expressed support for both bills.
Even if Mr. Waugh’s bill does pass, he posits that it would not become law until this August or September in a best-case scenario.
“And then if we get an election, the bills are gone,” he said. He thinks a snap election this year would push back any sports betting legislation until at least 2022.
Paul Burns, chief executive of the Canadian Gaming Association, believes one of the bills will pass, and that theScore has the potential to capitalize on the Canadian market.
“They’re in a very good position because they’re a Canadian brand, they’re recognized,” he said. In Canada, theScore could face competition from major U.S. operators such as Boston-based DraftKings and New York-based FanDuel if single-game sports betting is decriminalized.
Mr. Burns says Canadians wager about $10-billion through illegal bookmakers annually, and spend another $4-billion on offshore sports betting platforms. In comparison, he says, Canadians spend about $500-million annually on legal sports betting.
“Sports betting is legal, It’s just not the type of sports betting the customers want.”
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
Jaren Kerr