ZEAL Network expands into UK prize draw market with SevenCanyon acquisition

ZEAL Network AG, based in Hamburg and known for its digital lottery services, is expanding its business. The company has acquired a majority stake in the British provider SevenCanyon Limited. This strategic acquisition grants ZEAL entry into the lucrative UK market for digital prize draws. It marks a significant step in the diversification strategy for the gaming provider. Financial details of the transaction have been disclosed.

ZEAL Network already held a minority interest in SevenCanyon. Now, the remaining 96.5% of shares have been acquired. This enables ZEAL to establish its presence in a market considered Europe's largest for digital prize draw products. It is an important strategic move.

Numbers and facts

The acquisition of the outstanding shares of SevenCanyon cost approximately £33.8 million. This amount may be subject to post-completion adjustments. Additionally, an earn-out payment of up to £4.8 million is due within six months of completion. ZEAL financed the acquisition with a €40 million, seven-year term loan. This loan was arranged by Deutsche Bank. SevenCanyon operates popular UK digital prize draw websites such as 7days Performance, Redline Competitions, and UK Carp Competitions.

The UK prize competition market is estimated to generate around £1.3 billion in annual revenue. It attracts approximately 7.4 million active players, according to a report by the consultancy Rokker. ZEAL expects the acquisition to be EBITDA-accretive. SevenCanyon is projected to make a significant contribution to the group's revenue and EBITDA. The company reaffirmed its EBITDA guidance of €70 million to €75 million for 2026, assuming a normal jackpot environment in Germany. In fiscal year 2025, ZEAL achieved an EBITDA of €68.8 million.

Background

ZEAL had already hinted at plans to expand into new markets within the prize draw sector during its FY25 earnings call in March. Dr. Stefan Tweraser, CEO of ZEAL, emphasized at the time that ZEAL had a "strong war chest" for investment opportunities.

Prize draws are gaining popularity in the United Kingdom. This is partly because they have not been subject to strict lottery regulations. A voluntary code of practice, introduced in May by the Department for Culture, Media and Sport (DCMS), governs this sector. Jamie Pinner, a senior leader at DrawHouse, recently stated:

"One of the key advantages in the UK is that prize draws are not currently subject to Remote Gaming Duty. That makes them a far more efficient revenue stream than sportsbook or casino products, at least for the time being."

This tax advantage makes the market particularly attractive to operators. The Prize Competition Council (PCC) was recently established in the UK. This trade body aims to promote standards, enhance player protection, and encourage long-term sector development. Stefan Tweraser commented on the acquisition:

"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 SevenCanyon's profitability, saying:

"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."

Why it matters for German players

For German players, these developments in the UK market currently have no direct impact. The German State Treaty on Gambling 2021 (GlüStV 2021) strictly regulates the online gambling market in Germany. Providers with a German license, issued by the Joint Gambling Authority of the Federal States (GGL), must adhere to clear rules. These include a deposit limit of 1,000 euros per month and a stake limit of 1 euro per spin for online slot machines. Additionally, players are registered with the central self-exclusion system OASIS and the nationwide gambling supervision system (LUGAS) to ensure player protection. Lottery-like offers, such as those ZEAL provides in Germany, are subject to specific regulations. Prize draws without a direct stake are generally not considered gambling under the GlüStV. ZEAL's expansion primarily concerns competition within the group itself, rather than direct product availability for German players. If ZEAL were to offer its products in Germany, they would have to completely comply with the strict German licensing conditions. This is a significant difference compared to the current, more liberal UK market for prize draws.

What it means for GGL-licensed casinos

For online casinos with a GGL license, ZEAL's expansion into the UK does not mean any immediate noticeable change. ZEAL's business with SevenCanyon focuses on prize draws, which are regulated differently in Germany than traditional casino games. GGL-licensed casinos must continue to focus on complying with GlüStV 2021. Strict player protection and anti-money laundering measures are standard here. The business models are different. While the UK prize draw market benefits from less regulation and the absence of a gambling duty, GGL casinos operate in a highly regulated market with detailed provisions. This makes comparisons difficult. For German players, only the GGL whitelist, which lists reputable and licensed providers, matters. Only there will players find safe and regulated online gambling options.