German lottery brokerage Zeal Network SE has announced its acquisition of a 96.5% stake in the UK-based prize draw operator, SevenCanyon Limited. This strategic move represents Zeal's entrance into the UK market, which it identifies as the largest in Europe for digital prize draw products.
SevenCanyon manages a portfolio of notable UK digital prize draw websites, including 7days Performance, Redline Competitions, and UK Carp Competitions. Until the acquisition announcement on Thursday, Zeal held a 3.5% equity interest in SevenCanyon. The purchase price for the remaining shares is estimated at £33.8 million, though it is subject to adjustments after completion. Additionally, an earn-out payment of up to £4.8 million is due within six months following the deal's completion.
Funding for this acquisition was arranged through a seven-year term loan of €40 million from Deutsche Bank. Zeal has indicated ambitions to expand into new markets via the prize draw sector since its FY25 earnings call in March. CEO Dr. Stefan Tweraser mentioned that Zeal possesses a substantial "war chest" for potential investments.
The concept of prize draws has been integral to Zeal's operations for some time. Former CEO Helmut Becker remarked on the appeal of this vertical to younger players in an interview last year, expressing belief in the necessity for increased innovation in the industry to cater to emerging demographic needs.
This acquisition is characterized by Zeal's executives as a strategic move for both geographic and product diversification. Tweraser stated, "SevenCanyon is one of the most successful prize draw operators in the UK – we have known them for years. With the acquisition, we hit the ground running in a highly attractive and growing market."
CFO Andrea Behrendt highlighted the profitability of SevenCanyon, mentioning, "The business is highly profitable, and the purchase will mainly be financed through a new loan agreement, preserving Zeal’s flexibility for further capital allocation."
From a financial perspective, Zeal anticipates that the acquisition will be EBITDA-accretive, with expectations that SevenCanyon will significantly contribute to the group's revenue and EBITDA after consolidation. The company has reaffirmed its EBITDA guidance for 2026, predicting a figure between €70 million and €75 million under normal jackpot circumstances in Germany. For FY25, Zeal reported revenues that were 2% above the €205 million to €215 million projected in September, with EBITDA reaching €68.8 million at the high end of its earlier forecasts.
Zeal expressed confidence in the UK prize draw market's potential for increasingly organized regulatory frameworks, which would aid operators with substantial compliance experience. Currently, this sector is regulated under a voluntary code set forth by the Department of Culture, Media and Sport (DCMS) since May.
Jamie Pinner, a senior leader at DrawHouse, stated, "One of the key advantages in the UK is that prize draws are not currently subject to Remote Gaming Duty, making them a more efficient revenue stream than sportsbook or casino products, at least for the time being."
Recently, a trade body called the Prize Competition Council (PCC) was established in the UK to represent the prize draw industry. This body aims to unify operators to promote responsible standards, enhance player protections, and encourage long-term development.
An April report by consultancy Rokker estimated that the UK’s prize draw competition market generates around £1.3 billion in annual revenue and has about 7.4 million active players.
