Stalking Horse Or Pale Rider, What The Sandler Effect Signifies For Entain

Stalking Horse or Trojan Horse, Pale Rider or Roughrider, the equine idioms to describe Ricky Sandler, a new non-executive Director of troubled UK gambling leviathan Entain, are legion.

The Park Avenue, New York-based moneyman, who caused a major ruckus last year by questioning the acquisitions policy of FTSE100 Entain, which arguably triggered the corporate defenestration of CEO Jette Nygaard-Andersen in the process, has built on his major shareholding in the company — and now been brought on board to help navigate the treacherous fiscal waters ahead.

Insincerity is not only a transitory, phasing, state-of-play that affects most of us from time-to-time, it’s also-–assert those at the top-–a vital survival tool in the armoury of executives fighting for prominence-–if not dominance–-in the higher echelons of corporate power.

So when Entain Chair Barry Gibson welcomes Sandler with the slight recommendation that “Ricky has a deep knowledge of our business and a firm belief in the quality of our operations and substantial growth opportunities” you can bet your bottom dollar that the two heavy-hitters are poised for a titanic clash of wills and potential power struggle as the year surges ahead.

Entain, one of the UK’s ‘Big Four’ gaming Omnichannels–and one of the world’s biggest betting conglomerates-–lies at the mercy of The Gambling Fates.

Losing Streak

Losing over 40 percent of its share market value in the last 12-months, the home of Britain’s storied Ladbrokes brand and joint-owner of US sportsbook BetMGM, has been brought to crisis by a massive £585 million (US$741m) UK government fine for historic financial misdemeanours, an ill-judged acquisition spree and, it would appear, a chronic lack of executive confidence.

Sandler, the founder and CEO of hedge fund Eminence Capital, first took a stake in Entain in late 2020 and now owns between four and five percent of the company.

He came to greater media prominence and became a major player in the ongoing Entain saga when he slammed the company for diluting stock in order to finance the £750 million purchase of Poland’s premier gambling player STS Holdings in June last year.

In a blistering attack he charged the move was little more than “empire building” and a strategy “that was destroying shareholder value”.

For many industry watchers, Sandler’s cutting analysis was the blow, if not the coup de grâce, that did for Jette Nygaard-Andersen (pictured right) this past December, a breaking story extensively covered in these pages.

Soon after being appointed Entain CEO in January 2021, Dane Nygaard-Andersen embarked on what turned out to be a spectacular spending spree, buying Baltics-facing Enlabs AB in March, Portuguese Bet.pt and then esports betting vehicle unikrn in September of that year.

By January 2022 it was the turn of Latvia’s Klondaika to be minced by the Entain machine, followed by Avid Gaming, Poland’s Totolotek in March, SuperSport in Croatia in November and Holland’s BetCity by the year’s turn.

Private Jette

If the strategy was designed to buy Entain out of trouble then it was a spectacular failure.

Indeed with the historic corruption and money laundering scandal of former Turkish operations, when it was operating as GVC, hanging over its head like a proverbial ‘Sword of Damocles’ how could it be any other way.

That judgement was delivered in brutal form in September last year when (GVC) Entain was hit with the mega fine for the Turkey imbroglio — one of the largest corporate sanctions in UK history.

But what remains debatable is just how much of this M&A strategy was being truly driven by Nygaard-Andersen and how much by the Entain Board, led by Gibson.

For 71-year-old Gibson–a gambling industry veteran, who first joined the then-GVC Board as a non-executive Director in November 2019, before being appointed Chair in late February 2020, (10-months before GVC was rebranded as Entain)–is the ‘bridge’ that links the rackety, discredited regime of GVC’s then-CEO Kenny Alexander and the failed executive administration of ‘Private Jette’ Nygaard-Andersen.

In Sandler (pictured right), Gibson will now have a formidable, ‘no-bullshit’ activist shareholder sitting alongside him in the Entain boardroom.

Major Moves

Stalking Horse or Pale Rider, either way Sandler is likely to trigger further major moves in the Entain saga in very short order.

MGM Resorts International, Entain’s joint-venturist in BetMGM, and leading US sportsbook DraftKings have had prior bids to buy Entain rejected.

But a renewed offer from either, if not both, of these sources now looks a dead cert; with full control of BetMGM the ultimate prize.

“[I intend to work] with my fellow directors to help Entain achieve long-term success and create lasting value for its shareholders,” Sandler was quoted as saying when he joined the Board this week.

Translating corporate speak, ‘Value for Shareholders’ could be interpreted as selling — and selling high.

In the coming sale of Entain, predicts this reporter, both Ricky Sandler and Barry Gibson and his wife Brenda Gibson will make a financial killing.

All three, tellingly, have recently upped their share stakes in Entain, formerly GVC; yet another stumbling giant of British gambling.

Watch this space.