Esports Entertainment Group (EEG) narrowed its net loss to $32.3m in the fiscal year 2023 (12 months ended 30 June 2023), according to a new business update.

Financial results

Revenue dropped significantly from FY22 to FY23, as the company generated $23m in the latest financial year, compared to $58.4m in the prior year.

That drop was related to recent changes in EEG’s structure, which have seen it offload many of its formerly owned assets to focus more clearly on its presence in the esports sector.

Although revenue has fallen, EEG was also able to dramatically reduce its costs over the reporting period.

The cost of revenue fell from $24.2m in FY22 to just $8.8m in FY23, while sales and marketing expenses fell from $25.7m to $5.9m over the same period.

General and administrative expenses, meanwhile, fell from $51.3m to $28.9m.

As a result, EEG’s net loss for the fiscal year 2023 was reduced to $32.3m, compared to $102.2m in FY22.

Restructure continues

In April, EEG’s new CEO Alex Igelman revealed that the company had reduced its headcount from 158 to 99, thereby lowering salary costs by around 36%, alongside a slew of other cost saving measures.

At the same time, the business had reduced its debt and other liabilities through several measures including the sale of Bethard and closure of UK-licensed Argyll Entertainment.

“Over recent months, the company has undertaken a comprehensive examination of our organisation, focusing on the anticipated trajectory of the esports and iGaming sectors,” said CEO Igelman in the company’s FY23 business update. 

“Through this process, we conducted a deep dive into our business from top to bottom and pinpointed operations and contracts that weren’t profitable, leading to decisive actions that have set us up for a promising future. 

“Although the restructuring came with one-time expenses, we are confident that the long-term advantages will significantly outweigh these costs.”

Esports focus

The business update also provided additional information on EEG’s renewed focus on the esports sector.

“Our recent focus has turned towards developing initiatives to further broaden the company’s esports and iGaming offerings in order to create a comprehensive, end-to-end offering of online betting options to our customers,” Igelman said.

The company has recently expanded an existing agreement with esports betting solution provider Oddin.gg, whose iFrame solution is set to be integrated into EEG’s iGaming platform in Q1 2024, allowing the operator to supply more esports betting markets to its customers.

The expanded partnership “marks a significant step forward for Esports Entertainment as it will allow us to provide odds on traditional esports events, such as seasonal, big-name events, annual esports tournaments, as well as short-cycle wagerable events,” Igelman said.

Further to that agreement, EEG subsidiary ggCircuit has entered into a new partnership with Ghost Gaming and Skillshot Media, “to establish a first-of-its-kind Scholastic Esports Innovation Centre within the Ghost Gaming HQ lab.”

The centre will be “dedicated to pioneering research and co-developing cutting-edge technology tailored to the evolving needs of school esports programs,” Igelman said.

“Overall, we believe the company-wide initiatives we have undertaken this year will place us in a stronger financial position, and at the forefront of the rapidly growing esports wagering market which is poised to grow significantly by 2025. 

“Moreover, the addition of Oddin.gg’s iFrame supports the Company’s global expansion strategies, given Oddin’s established international presence. As a result, I could not be more excited by the outlook for our business,” Igelman concluded.

Esports Entertainment Group (EEG) has appointed Robert “Bobby” Soper, renowned casino executive and founder of Sun Gaming and Hospitality, to its board of directors.

Soper brings more than 20 years’ experience in the resort and gaming industry to the business, EEG said, having overseen the development of several projects from the ground up while leading the operations of integrated resorts across highly competitive markets.

Soper remains the CEO of Sun Gaming and Hospitality, a provider of advisory services to resort operators, investors, regulatory bodies, private equity funds, banks and developers across all areas of resort finance, development and operations.

Previously, Soper served as president and CEO of the Mohegan Sun Pocono casino resort in Pennsylvania, as well as president and CEO of Mohegan Sun in Uncasville, Connecticut.

In those roles, he was responsible for overseeing the launch of the first casino in Pennsylvania as well as the launch of Mohegan Sun’s online operations.

Soper also served as president and CEO of Mohegan Sun’s parent company, the Mohegan Tribal Gaming Authority, where he oversaw business development and the company’s day-to-day operations.

“I am honored to welcome Robert, a highly esteemed and widely renowned leader in the resort and gaming industries, to our board of directors,” commented Alex Igelman, CEO of Esports Entertainment Group. 

“He brings an impressive track record and deep relationships across the industry that I believe will add tremendous value to our company as we execute on our strategic turnaround. 

“His willingness to join our board illustrates his confidence in the company’s ongoing transformation, as well as our significant potential within the iGaming and esports sectors,” Igelman concluded.

In April, EEG revealed drastic cost-cutting measures set to take place under new CEO Igelman, who replaced Grant Johnson in the role earlier this year.

After taking over the lead role, Igelman suggested EEG could move itself into a dominant position within the emerging esports industry and drive long-term profitability following cost-cutting measures which included a reduced headcount and the paying down of outstanding debt.

Damian Mathews has rejoined Esports Entertainment Group (EEG) as chief operating officer after a six-month hiatus.

He previously held the position of CFO from April 2022, and was additionally appointed as COO in June 2022.

Although he resigned from those roles in December 2022, Mathews retained his board seat. He initially joined EEG’s board of directors in June 2020.

“I am delighted to announce that Damian Mathews has agreed to rejoin the senior management team as chief operating officer of Esports Entertainment Group,” said EEG CEO Alex Igelman.

“Despite his departure, he continued to serve as a dedicated member of the board where he felt he could have the greatest impact.

“In his prior, albeit short tenure as COO/CFO, he played an integral role in streamlining the company’s operations and advocating for critical changes within the organisation.

“Importantly, his decision to rejoin the team reflects his complete alignment with the new direction of the company and the promising future of the esports industry,” he concluded.

A new vision

In recent months, EEG has taken significant steps to address various financial challenges and poor performance in 2022.

CEO Igelman spearheaded a restructuring effort that involved a reduction of approximately 37% in headcount and the implementation of cost-cutting measures to improve operational efficiency.

In addition to the workforce reduction, Igelman conducted a thorough review of the company and developed a new corporate vision to guide its future direction.

Dramatic turnaround

Mathews said that since leaving his CFO/COO position, and in his ongoing role as a member of EEG’s board, he has “witnessed firsthand the dramatic turnaround, led by Alex, in just a few short months.”

“I could not be more confident in the new leadership and direction of the company and look forward to playing a key role in driving the financial and operational success of the company.

“The esports and iGaming industries are experiencing rapid growth and I truly believe Esports Entertainment Group is now ideally positioned with the right assets at the right time, with the right leadership and business model to establish a dominant position in this rapidly emerging market,” he concluded.

Mathews has over 25 years of experience in senior finance positions within investment management, banking and accounting.

His previous roles include COO for Auckland Real Estate, CFO of the Qatar and Abu Dhabi Investment Company, and various senior management positions at the Commonwealth Bank of Australia Group, the Royal Bank of Scotland Group, and Credit Suisse First Boston investment bank in London and the Bahamas.

Shares in Esports Entertainment Group (EEG) have surged after CEO Alex Igelman revealed the group cut around 37% of jobs and implemented several cost-cutting measures to enhance operational efficiency.

In a letter to shareholders, Igelman said that by streamlining the business, EEG can move into a dominant position within the high-growth esports industry and “drive long-term profitability”.

Esports Entertainment’s financial health has been under strain since the company announced a net loss of $63.6m for the first three months of 2022

Igelman has since carried out a company review and developed a corporate vision after he joined the business in January.

EEG CEO Alex Igelman: “I strongly believe that our achievements over a short three-month span are truly noteworthy. However, this is merely the starting point of our journey.”

As part of a restructuring exercise, Igelman revealed the company has reduced its headcount from 158 full-time employees at the end of 2022 to 99 full-time employees, inclusive of planned reductions.

Annualised salaries are expected to decline by approximately 36% based on the actions taken thus far.

Although the company incurred upfront costs related to the restructuring, these initiatives are expected to lower operating expenses by more than $4m on an annualised basis over time.

Debt reduction

Moreover, through various measures, including the sale of its Bethard business, the company has reduced debt and other liabilities by approximately $27.1m since the end of last year.

In March, the group also initiated the liquidation of Argyll Entertainment, an online gambling business in the UK with recurring losses.

“I strongly believe that our achievements over a short three-month span are truly noteworthy. However, this is merely the starting point of our journey,” he wrote.

He added that the company plans to have a renewed focus on esports wagering through new betting content and offerings via its MGA licence.

In the US market, the group wants to direct its attention toward aggregating and supplying B2B esports solutions and content for the esports and esports gambling industries.

“Esports Entertainment has extremely valuable and differentiated assets, which we believe will be key to the future of this industry,” he concluded.

Esports Entertainment Group (EEG) has entered into a share purchase agreement to sell its Bethard business for total consideration of €9.5m.

Terms of the agreement

Bethard is an operator of online casino and sportsbook brands licensed in both Malta and Sweden.

The total purchase consideration was determined to be around €9.5m, with €1.65m payable to EEG in cash upon closing.

A further €6.5m is attributed to EEG’s release from payment of its contingent consideration liability relating to its acquisition of Bethard in 2021.

EEG acquired the business from parent company Gameday Group for €16m in cash, plus consideration equal to 12% of the brand’s NGR for the following two years.

Now, Bethard’s buyer will also assume liabilities of around €1.2m, while the terms of the sale allow for a cash holdback of €150,000 which may be retained by the buyer should liabilities exceed the amounts agreed upon in the purchase agreement.

Esports Entertainment Group CEO Alex Igelman: “I am extremely encouraged and pleased with the speed and efficiency in which senior management effectuated these important actions.”

The sale is expected to close during the two-week period following the signing of the purchase agreement on 14 February.

As a further condition to the sale, EEG has entered into an amendment and waiver agreement that requires it to deposit 50% of the proceeds into a bank account in favour of the lender which provided it with a $16.7m senior convertible note last February.

As a result of the amendment, EEG must now also deposit 50% of the proceeds of any future sale of assets, or offer or sale of debt or equity, into an account in favour of the lender.

All proceeds of any additional indebtedness incurred into the future must also be transferred into such an account.

In other news

The sale of Bethard follows on from a previous announcement that EEG would close its UK-licensed Argyll Entertainment business in November last year.

With the sale of Bethard underway and Argyll now closed, the business plans to focus on its Lucky Dino iGaming brands that operate on its proprietary platform.

In addition to the sale of Bethard, EEG also closed the sale of its Spanish gambling licence in January, resulting in proceeds to the company of €2.1m, of which 50% will be deposited in a bank account in favour of its lender.

It also terminated its lease at an idle property in January, eliminating total lease liability over the lease term of $800,000.

These changes to the business’ structure have helped EEG reduce its debt from $32.2m as of 30 September 2022 to $15.5m as of 16 February 2023.

Last week, Kindred Group director of sportsbook Andreas Reimblad revealed on Twitter that Bethard was undergoing maintenance as it switched sportsbook providers from DraftKings B2B (SBTech) to BetConstruct.

BC? 😳 pic.twitter.com/ZIwfAZqfB6

— Andreas Reimblad (@Reimblad) February 17, 2023

He shared a message from Bethard which appeared to have been sent to customer accounts.

CEO commentary

“I am very pleased at the work that is being undertaken to reduce debt and focus on our core iGaming and esports assets,” said Esports Entertainment Group CEO Alex Igelman.

“We remain committed to building a world-class esports gambling operation that is global in reach and that provides esports content and strategic services to those involved in esports gambling, as well as those seeking to enter the market. 

“I am extremely encouraged and pleased with the speed and efficiency in which senior management effectuated these important actions.”

Igelman replaced former CEO Grant Johnson – who also acted as the firm’s chairman – in January, while industry veteran Jan Jones Blackhurst took up the head role on the company’s board of directors.

Johnson subsequently revealed plans to sue the business over an alleged breach of contract relating to his removal.

Igelman is a gambling industry lawyer and consultant with more than 25 years’ experience in the sector. He has worked in the online sector since the mid-1990s and has also spent several years in the esports industry.

He is also the MD and founder of Esports Capital Corp (ECC), a boutique advisory firm in the esports gambling sector.

Ex-Esports Entertainment Group CEO Grant Johnson is suing his former employer over an alleged breach of contract.

Johnson was ousted by the operator’s board of directors on 3 December 2022 following a shambolic year of poor performance and mounting financial issues.

Johnson, who was paid a total of $479k in full-year 2022, is now seeking financial damages after filing a suit in the United States District Court for the Southern District of New York on 6 January 2023.

In the suit, the executive claimed his employment was terminated for “contrived” reasons and that EEG has failed to pay him contractually agreed wages, bonuses and severance.

Johnson’s case centres on the fact his contract allegedly specified he could only be let go for reasons including “fraud, wilful misconduct or gross negligence”.

EEG: “The company believes the claims are without merit and intends to defend against the claims vigorously.”

He is now seeking compensation of more than $1m, including a cash bonus of $450,000 and 200,00 shares of common stock in Nasdaq-listed Esports Entertainment Group.

The operator said it would defend itself vigorously and that Johnson’s claims are without merit.

Back in December, Ontario resident Johnson said he was deeply disappointed after being instructed to leave the company he oversaw for nearly nine years.

Earlier this month, gambling industry lawyer and consultant Alex Igelman was confirmed as his successor.

Igelman, who has been tasked with bringing the company back from the brink, received 2.5 million shares of common stock on joining the business.

Beleaguered betting operator Esports Entertainment Group (EEG) has appointed gambling industry lawyer and consultant Alex Igelman as its new CEO.

Igelman joins the business following the departure of former CEO and founder Grant Johnson, who was “disappointed” to be removed from the role by the firm’s board of directors in December.

With Johnson also having served as chairman of the board, that role has since been taken over by former Las Vegas mayor and Caesars Entertainment board member Jan Jones Blackhurst, who joined EEG as a board member back in May 2022.

Changes at the business follow an extremely difficult period throughout the duration of 2022.

In February, the firm announced it had reduced previously issued full-year revenue guidance by $30m, causing its share price to collapse from over $3 to under $1 between February and March.

Subsequent financial results and trading updates throughout the year saw EEG shares continue to slide as investors persisted in dumping the stock.

Incoming EEG CEO Alex Igelman: “The company is making significant strides to refine its focus on creating a valuable esports brand and is initially looking inward at some of its key assets to kickstart this process.”

Today, shares trade for less than $0.08 – an alarming figure for investors who saw EEG through its April 2020 listing on the Nasdaq, when shares traded for as much as $8.85.

At its current share price, the 2.5 million shares of common stock Igelman is set to receive on joining the business are worth around $192,500.

Igelman will also receive a further 2.5 million time-based stock options, which may not be sold or transferred for at least six months, and will vest in equal quarterly instalments over a one-year period subject to his continued employment with the company.

Igelman is a gambling industry lawyer and consultant with more than 25 years’ experience in the sector. He has worked in the online sector since the mid-1990s and has also spent several years in the esports industry.

The incoming CEO is also MD and founder of Esports Capital Corp (ECC), a boutique advisory firm in the esports gambling sector.

“I am thrilled for the opportunity to join EEG at this important time in its journey and to work alongside someone as experienced and respected as the new chair, Jan Jones Blackhurst,” Igelman said.

EEG chair Jan Jones Blackhurst: “We are excited to have Alex join the senior leadership team. He brings a wealth of knowledge, experience, and fresh perspective as we move the company forward.”

“The company is making significant strides to refine its focus on creating a valuable esports brand and is initially looking inward at some of its key assets to kickstart this process.

“The company also owns certain valuable assets and relationships in the esports sector and there is a substantial growing addressable domestic esports betting market for the company to take a leadership position in. 

“The company will continue to structure its operations and financial position to maximise value for shareholders. I look forward to bringing my experience into the leadership of the company and to focus on the execution of these transformative initiatives,” he added.

EEG chair Blackhurst commented: “We are excited to have Alex join the senior leadership team. He brings a wealth of knowledge, experience, and fresh perspective as we move the company forward.”

Last month, EEG said it was considering an offer from an undisclosed third-party company to purchase its assets and intellectual property via a non-binding letter of intent.