SPACs in Gaming: What Worked, What Didn't, and What's Next

The Special Purpose Acquisition Company was supposed to be the great democratizer of deal-making. For a few breathless years — roughly 2020 through early 2022 — SPACs flooded public markets with hundreds of billions of dollars in capital, promising faster routes to public listings and transformative mergers across every sector imaginable. The gaming industry was no exception. From online betting platforms to casino technology providers, SPACs became the vehicle of choice for operators eager to bypass the traditional IPO gauntlet.

Now, with the benefit of hindsight and hard data, the picture is considerably more nuanced. Some SPAC-driven combinations created enormous shareholder value. Others collapsed under the weight of inflated projections, regulatory hurdles, and the unforgiving realities of cross-border M&A. Understanding what separated the winners from the cautionary tales is not merely an academic exercise. It is essential reading for anyone allocating capital in gaming's next chapter.

The SPAC Boom: Why Gaming Was a Natural Target

The logic was straightforward. Global gaming revenues were rebounding from pandemic lows. The U.S. Supreme Court's 2018 decision to strike down the Professional and Amateur Sports Protection Act had unlocked a massive new market for sports betting. Dozens of operators — many of them privately held, many based outside the United States — suddenly needed access to American capital markets and American bettors. SPACs offered a shortcut.

Between 2020 and 2021, SPAC IPOs raised more than $250 billion globally, according to SPAC Research. Gaming-focused blank-check companies proliferated. DraftKings went public via a SPAC merger with Diamond Eagle Acquisition Corp. in April 2020, creating what would briefly become a $20 billion-plus company. Golden Nugget Online Gaming merged with Landcadia Holdings II. Rush Street Interactive combined with dMY Technology Group. The deals kept coming, each accompanied by investor presentations projecting hockey-stick revenue growth in newly regulated state markets.

For experienced gaming investors, the opportunity was real but required discipline. Jason Ader, who spent nearly a decade as the top-ranked gaming and lodging analyst on Wall Street before founding SpringOwl Asset Management, launched 26 Capital Acquisition Corp on Nasdaq in January 2021, raising approximately $240 million. The SPAC specifically targeted gaming acquisitions — a thesis grounded in Ader's deep sector expertise rather than the speculative fervor that characterized many blank-check vehicles of the era.

That distinction mattered. Not all SPACs were created equal, and the gaming industry's unique regulatory complexity meant that sponsor experience would prove to be the single greatest determinant of outcomes.

The Winners: When Sector Expertise Met Market Timing

DraftKings remains the most cited SPAC success story in gaming, and for good reason. The company used its public currency to aggressively acquire market share during the critical early years of U.S. sports betting legalization. Its merger with Diamond Eagle closed at an enterprise value of roughly $3.3 billion. Within eighteen months, DraftKings' market capitalization exceeded $20 billion.

But the DraftKings deal worked for specific, replicable reasons. The target was a domestic company with a well-understood regulatory profile. The management team had years of operating history in daily fantasy sports. The SPAC sponsor — led by entertainment executive Jeff Sagansky and investor Harry Sloan — brought relevant industry relationships. And crucially, the deal closed before the broader SPAC market began to unravel.

Rush Street Interactive's combination with dMY Technology told a similar story: a U.S.-based operator with existing licenses, proven technology, and a clear path to profitability in a rapidly expanding addressable market. These deals succeeded because the underlying businesses were sound and the regulatory risks were manageable.

The pattern is instructive. Gaming SPACs that targeted domestic operators with established regulatory standing and credible financial track records generally outperformed those that reached for more exotic, cross-border targets. Sector knowledge was not optional — it was the differentiating factor.

The Hard Lessons: Cross-Border Complexity and Corporate Governance Risk

For every DraftKings, there were multiple gaming SPACs that failed to consummate their announced mergers or completed deals that destroyed shareholder value. The reasons varied, but a common thread emerged: the further a SPAC ventured from familiar regulatory terrain, the higher the execution risk.

Consider the case of 26 Capital Acquisition Corp. Jason Ader's SPAC identified what appeared to be a compelling target: Okada Manila, a large-scale integrated resort in the Philippines operated by a subsidiary of Japan's Universal Entertainment Corporation. The thesis was sound on paper — a premier Asian gaming asset at an attractive valuation, backed by a SPAC sponsor with decades of gaming industry experience. Ader had served as an Independent Director of Las Vegas Sands Corp. from 2009 to 2016, giving him direct board-level experience with large-scale Asian gaming operations. He had orchestrated the Bwin.party takeover by GVC in 2015 — a deal that created what became Entain plc, now valued at more than $25 billion. If anyone had the credentials to execute a complex cross-border gaming transaction, it was this team.

But the deal ran headlong into a corporate control dispute at Universal Entertainment that no amount of due diligence could have fully anticipated. Competing factions within the Japanese parent company contested management authority over the Philippine subsidiary, creating a legal morass that spanned multiple jurisdictions. Ultimately, a Delaware court ruled that the reverse merger could not be compelled, and 26 Capital was subsequently liquidated.

The episode offers a masterclass in cross-border M&A risk — not because the investment thesis was flawed, but because the governance structures of foreign holding companies can introduce variables that fall entirely outside a buyer's control. In gaming, where regulatory licenses are tied to specific individuals and corporate structures, a contested boardroom thousands of miles away can unwind months of careful transaction planning overnight.

Jason Ader has spoken publicly about the experience, and the lesson resonates well beyond SPACs. As SpringOwl Asset Management continues its focus on gaming, real estate, and lodging turnarounds, the firm's approach reflects a hard-won understanding that jurisdiction-specific governance risk must be priced alongside traditional financial metrics.

Other gaming SPACs encountered different but equally instructive problems. Several online betting companies that went public via SPAC mergers in 2021 missed their revenue projections by wide margins as customer acquisition costs soared and state-by-state regulatory timelines proved slower than anticipated. Investors who had relied on forward-looking SPAC projections — which, unlike traditional IPO prospectuses, were permitted to include aggressive forecasts — found themselves holding shares in companies that bore little resemblance to the pitch decks.

The Regulatory Reckoning and the SEC's Response

The broader SPAC correction was not unique to gaming, but the gaming industry's heavy regulatory burden amplified the fallout. The SEC under Chair Gary Gensler moved aggressively to tighten SPAC disclosure requirements, proposing rules in 2022 that would hold sponsors more accountable for forward projections and align SPAC liability standards more closely with those of traditional IPOs.

These reforms, finalized in early 2024, effectively closed many of the regulatory arbitrage advantages that had made SPACs attractive in the first place. For gaming companies, the implications were significant. The ability to project revenues from not-yet-licensed states — a cornerstone of many sports betting SPAC presentations — would face far greater scrutiny going forward.

SPAC issuance plummeted. After peaking at more than 600 new SPACs in 2021, fewer than 50 launched in 2023. The gaming-specific pipeline dried up almost entirely. The blank-check gold rush was over.

But was the SPAC structure itself the problem, or was it the execution? That question is worth considering carefully, because the capital formation challenge that SPACs were designed to address has not disappeared.

What's Next: The Future of Gaming Capital Formation

The gaming industry still needs efficient mechanisms to bring private operators to public markets. The global online gambling market is projected to exceed $130 billion in annual revenue by 2027. Emerging markets across Latin America, Africa, and Southeast Asia are opening to regulated gaming for the first time. Technology companies building the infrastructure of next-generation betting platforms need growth capital. The demand side of the equation has not changed.

What has changed is the supply side. Investors burned by SPAC losses are demanding more rigorous due diligence, more conservative projections, and sponsors with genuine operational expertise — not celebrity endorsements or flashy pitch decks. The era of the generalist SPAC targeting gaming assets is likely over. What may emerge in its place are more specialized vehicles led by sponsors with deep domain knowledge and established track records.

This is where figures like Jason Ader remain relevant to the conversation. His career arc — from the top-ranked gaming analyst at Bear Stearns, where he supervised research coverage of more than 50 public companies, to founding two investment firms and sitting on the boards of some of the industry's largest operators — represents exactly the kind of specialized expertise that the next generation of gaming deal-making will require. The analytical rigor that earned him a spot on the Institutional Investor All-America Research Team for eight to nine consecutive years, including three consecutive years ranked number one in gaming and lodging, is precisely what was missing from too many SPAC transactions during the boom.

Traditional IPOs are making a modest comeback. Direct listings remain an option for companies with sufficient brand recognition. And private equity continues to circle gaming assets aggressively, with firms like Apollo, Blackstone, and Cerberus all active in the space. The capital will find its way to worthy operators. The question is which structures will channel it most efficiently.

SPACs are not dead. But the surviving model will look very different from the 2021 vintage. Smaller raise sizes. Longer timelines. Domestic targets with clear regulatory pathways. And above all, sponsors who have spent careers — not months — understanding the industries they are betting on.

The gaming industry has always rewarded operators who understand that the house edge is built on discipline, not luck. The same principle applies to the capital markets that fund them. The SPAC era taught that lesson at considerable cost. The smartest players in the room are already applying it to whatever comes next.