Posted on: December 7, 2021, 06:29h.
Last updated on: December 7, 2021, 11:00h.
STS Holding, the largest sports betting operator in Poland, went public last week on the Warsaw Stock Exchange (WSE). The launch was reportedly very successful, with millions of dollars collected. Now, STS is trying to figure out where to spend its newfound wealth.
STS picked up the equivalent of around US$264.6 million (1.08 billion Polish zloty or €235.5 million) last week when it offered 30% of its shares to the public, according to a report by Bloomberg. A shopping spree could be in store for the company with the proceeds. However, STS CEO Mateusz Juroszek wants to be smart about it.
Juroszek explains that he wants to create an “investment vehicle” that would be able to buy into companies that offer high dividends. The targets would be entities listed on the WSE, including Allegro.eu.SA. The eCommerce platform is the largest in the country, and is described by Juroszek as a primary component of Poland’s Internet culture.
The CEO told Bloomberg that STS is motivated to support the Polish economy and local stocks. STS reportedly controlled as much as 46% of the Polish sports betting market, according to previous figures released by the company. With that big a stake, it now wants to help the economy grow stronger.
“The family office will look for opportunities in tech, eCommerce, and real estate sectors. Polish stocks will make up some 20% to 30% of the portfolio,” STS CEO Juroszek told Bloomberg.
Expansion Across the Atlantic Possible
It’s also possible that STS will follow the path carved out by many other European gaming operators. With the North American industry growing rapidly, it is still the land of opportunity for certain companies. Primarily, those that can remain self-sufficient as they enter new markets and overcome acquisition obstacles.
STS might have created a small advantage for itself if it decides to seek operations in the US and Canada. It has invested in Flutter Entertainment and Better Collective, both already there.
The North American market isn’t the only target, though, and anything is possible.
“For STS, we look for targets in central and eastern Europe, but we don’t have anything precise on the radar, as we have a selective and steady approach,” Juroszek explained.
STS could also look at other markets where it might be able to gain a competitive edge. The company stated, when it first announced the public launch in September, that it would target markets that were “insufficiently served in terms of innovation or advancement of product offering.”
Poland’s Sports Betting Market is Growing
Poland’s legal sports betting market has been growing over the past couple of years. This is due to amendments to the Gambling Act that saw an additional 12% turnover tax for online sports betting operators, and the ability of the country’s regulatory body to block offshore sites.
Re-regulation seems to have brought about a period of rapid growth in the online betting industry. Revenue grew from zł999.1 million (US$244.28 million) in 2018 to zł1.50bn (US$366.75 million) by 2020. According to H2 Gambling Capital, the market’s compound annual growth rate (CAGR) is 12.5% between 2016 and 2026.
Despite the rapid growth and the results of its public launch, STS won’t be ready to see big dividends from new investments quickly. Juroszek indicates that the company may need up to five years to develop a strong investment arm.