iGaming NEXT Premium Content

The United Arab Emirates (UAE) has created a federal authority to regulate commercial gaming as the country takes another step towards legalising lottery and casinos.

The news was confirmed by the state-owned Emirates News Agency (WAM) on 3 September. The newly created regulator is called the General Commercial Gaming Regulatory Authority (GCGRA).

It has pledged to introduce a “world-leading regulatory framework” for national lottery and commercial gaming in UAE, which looks increasingly likely to become the first Gulf state to legalise land-based casino gambling.

There was no mention of online gambling in the WAM press release, the introduction of which seems extremely unlikely at this stage.

US casino giant Wynn Resorts expects to “soon” obtain a licence from the regulator after last year announcing plans to build a $3.9bn integrated resort in Ras Al Khaimah, which is the UAE’s sixth largest city and an emirate around 45 minutes away from Dubai.

The GCGRA has looked to the US for its leadership team.

Gaming Laboratories International veteran and former Missouri Gaming Commission director Kevin Mullally has been appointed CEO of the new regulator, while the authority will be chaired by ex-MGM Resorts CEO Jim Murren.

Murren said: “I am delighted at the appointment of Kevin Mullally. He brings unparalleled category experience and will be invaluable in creating a fit-for-purpose regulatory framework for the UAE.”

UAE government officials have said there are no imminent plans to allow gambling, but casino operators are increasingly confident that change is being considered as the country looks to protect its reputation as a tourism hotspot.

Bloomberg Intelligence gaming analyst Angela Hanlee believes the UAE could generate $6.6bn in gaming revenue annually with the potential to surpass Singapore, which is home to Las Vegas Sands’ renowned Marina Bay Sands resort.

Permitting and regulating gambling would be a major change for the UAE where Islam provides the main basis for legislation. Gambling is prohibited under Islam and is currently illegal in the country, where offenders can be fined or sentenced to two years in prison.

Bloomberg further estimates that Dubai would be the biggest beneficiary of the UAE’s push into commercial gambling.

“The emirate has already seen an influx of newcomers and tourists largely stemming from its handling of the pandemic and attractiveness as a wealth haven,” wrote Bloomberg reporter Omar Tamo.

“The introduction of casinos could further boost its tourism sector — a key pillar of the emirate’s economy — that’s been booming and escaped much of the geopolitical and economic uncertainty elsewhere in the world,” he added.

Elsewhere, Jon Gambrell, Gulf and Iran news director for the Associated Press, believes the creation of a federal regulator suggests that Abu Dhabi, the country’s capital, will oversee the potential operation of casinos in the country.

He also suggested that new casinos could increase the risk of money laundering, with Dubai’s real-estate market described as a “haven” for the financial assets of criminals.

Wynn Resorts is withdrawing its online sports betting and iGaming platform, WynnBET, from eight US states, becoming the latest company to scale back in an industry dominated by DraftKings and FanDuel.

The company said it will cease operations in Arizona, Colorado, Indiana, Louisiana, New Jersey, Tennessee, Virginia, and West Virginia as soon as possible.

Operations in Nevada and Massachusetts will continue unaffected while operations in New York and Michigan remain under review.

Wynn Resorts cited two primary reasons for this strategic shift. Firstly, the company acknowledged the substantial financial commitment required for marketing efforts aimed at acquiring sports-betting customers.

Secondly, the limited number of states legalising online casino games poses a challenge to achieving higher profitability.

Wynn Resorts’ CFO Julie Cameron-Doe commented: “In light of the continued requirement for outsized marketing spend through user acquisition and promotions in online sports betting, we believe there are higher and better uses of capital deployment for Wynn Resorts shareholders.”

“While we believe in the long-term prospects of iGaming, the dearth of iGaming legislation and the presence of numerous other investment opportunities available to us around the globe have led us to the decision to curtail our capital investment in WynnBET to focus primarily on those states where we maintain a physical presence,” she continued.

Strong competition

During Q2 2023, the group’s online division generated a loss of $25.7m, compared to a $57.3m loss in Q2 2022.

Presenting the results last week, Wynn Resorts CEO Craig Billings commented: “Our EBITDAR burn rate decreased both sequentially and year-over-year to $15m in Q2 2023. Our team continues to stay disciplined on costs, while driving improved marketing efficiency.”

Meanwhile, CFO Cameron-Doe hinted: “Sports betting is a tough business. It’s about the game of commodity, but we’re very focused on managing this business. We’ve got a very long-term shareholder-friendly view on it. So that’s our focus.”

Industry frontrunners DraftKings and FanDuel achieved positive EBITDA contributions in Q2.

Moreover, Penn Entertainment just sealed a substantial $2bn agreement with ESPN to launch ESPN Bet.

UAE plans

Moving onto different plans, as part of its strategic vision Wynn Resorts is set to commence the construction of Wynn Al Marjan Island, which CEO Billings described as a “must-see” attraction.

Wynn Al Marjan Island is a comprehensive luxury integrated resort project located in Ras Al Khaimah.

It is being undertaken in collaboration with RAK Hospitality Holding LLC and Al Marjan Island LLC. Wynn Resorts maintains a 40% equity ownership in the joint venture.

With an estimated project cost amounting to $3.9bn, the resort is anticipated to debut in the first quarter of 2027.

Wynn Resorts has reported a 76% revenue surge in Q2 2023, propelled by exceptional growth in its Macau operations.

Topline numbers

For Q2 2023, Wynn Resorts reported a substantial increase in revenue, reaching $1.6bn, up 76% on Q2 2022.

Net income stood at $105.2m, marking a stark contrast to the net loss of $130.1m incurred in the same period of 2022.

Diluted net income per share also reflected this positive trend.

In the second quarter of 2023, the diluted net income per share reached $0.84, a substantial improvement from the diluted net loss per share of $1.14 reported in the prior year’s quarter.

Meanwhile, Wynn recorded an adjusted property EBITDAR of $524.5m, up 192 % on the group’s Q2 2022 result.

This robust performance was underpinned by notable increases in operating revenues across various segments of Wynn Resorts’ portfolio.

News nugget

In particular, Wynn Resorts showed impressive growth in its Macau operations as post-Covid normalisation continued.

Operating revenue at Wynn Palace soared by a staggering 698% to $468.4m in Q2 2023.

Wynn Macau also contributed to this upward trajectory, with operating revenue reaching $301.6m. This figure marked a 414% increase compared to Q2 2022.

In the US, however, growth slowed. The company’s Las Vegas operations generated operating revenue of $578.1m, up 3% on Q2 2022.

Encore Boston Harbor reported revenue of $221.9m in the second quarter of 2023, an increase of 5.6% compared to the second quarter of 2022.

“Our second quarter results reflect continued strength in North America and Macau,” said Craig Billings, CEO of Wynn Resorts. “In Macau, the post-COVID recovery accelerated during the quarter.

“We were encouraged by the meaningful uptick in visitation and demand we experienced during the quarter, with particular strength in mass casino drop, direct VIP turnover, luxury retail sales, and hotel revenue, all above Q2 2019 levels,” he added.

Moreover, Wynn will begin construction on Wynn Al Marjan Island, “which we believe will be a ‘must see’ tourism destination in the UAE,” said Billings.

The group’s online division, Wynn Interactive, generated a loss of $25.7m in Q2 2023, compared to a loss of $57.3m in Q2 2022.

Billings commented: “Our EBITDAR burn rate decreased both sequentially and year-over-year to $15m in Q2 2023. Our team continues to stay disciplined on costs, while driving improved marketing efficiency.”

Best quote

Best question

Wynn did not offer many insights into its online segment, so Chad Beynon from Macquire asked for some more details. He also asked whether Wynn was on track to turn the segment profitable during Q4.

Billings responded: “I don’t think we ever said it would breakeven in the fourth quarter. But what we are focused on is making sure that it goes down every quarter.”

CFO Julie Cameron-Doe added: “Sports betting is a tough business. It’s about the game of commodity, but we’re very focused on managing this business. We’ve got a very long-term shareholder-friendly view on it. So that’s our focus.”

Current trading and outlook

Wynn Resorts saw a slight uptick in trading after presenting its results.

Billings emphasised a significant shift in the company’s business dynamics, where a larger portion now comes from mass-market customers compared to VIP clients.

Notably, on the mass-market side, there has been a decrease in the average length of stay, which is understandable given the impact of Covid-19.

“During Covid, if you made the commitment to come, you were coming for an extended period, but we’ve seen spend per customer actually go up,” he added.

This shift has led to a strategic advantage, said Billings, allowing for more efficient utilisation of their accommodations and ultimately benefiting overall business performance.

Wynn Resorts has appointed Paul Liu as a member of the company’s board of directors effective 3 August 2023.

Liu boasts significant professional experience in entertainment, hospitality, and financial services, both in China and the Asia Pacific region.

He will serve as an independent director and Class I member of the board.

Wynn said Liu’s experience of creating guest experiences and understanding of business talent in those markets would offer an important perspective to the existing board.

Liu is fluent in Chinese and was previously based in Shanghai, where he was a partner at Egon Zehnder, a consultancy firm focused on executive search and board advisory.

In this role, Liu led the Services Practice in the Asia Pacific region with a focus on hotels and hospitality, serving both multinational and domestic Chinese companies.

He was previously the COO of entertainment powerhouse Anschutz Entertainment Group China and was also founder and CFO of luxury lifestyle destination Three On The Bund.

Liu began his career with 14 years in finance at JPMorgan, UBS, Peregrine and Bank of America during spells in both New York and Hong Kong.

Elsewhere, Liu worked on founding and organising the Barnett-Oksenberg Lecture on Sino-American Relations as part of his role as a serving member of the National Committee on US/China relations.

Las Vegas-based casino operator Wynn Resorts also runs two integrated resorts in Asia, including Wynn Macau and Wynn Palace Cotai.

Wynn is set to report its Q2 2023 financial results tomorrow (9 August 2023).

Wynn Interactive has become the latest US sports betting operator to unveil a cross-state single wallet for its sportsbook.

The operator confirmed on Friday (4 August) that the new WynnBET app would be available to download in six US states.

Wynn customers with existing accounts in Arizona, Colorado, Indiana, Louisiana, Tennessee, and Virginia will be prompted to download the new app and log in with their existing accounts.

All existing bets, funds, and Wynn Rewards points will be transferred automatically, so users will no longer need to download separate apps in each state.

The new multi-state platform will also include faster deposit and withdrawal functionality said Wynn, as well as more sports betting markets and additional online casino games.

“We are thrilled to introduce the new WynnBET app with enhanced sportsbook technology to six more markets, which continues our commitment to offer players a five-star experience in each of the states we operate in,” said Wynn Sports Interactive president Ian Williams.

“We would like to thank state regulators for their timely review of our new platform as well as the many WynnBET team members and partners involved in this project for their diligent work in finalising this significant task in a short amount of time,” he added.

Wynn previously launched the new WynnBET sportsbook platform from day one in both Massachusetts and West Virginia.

The cross-border version of the app is also expected to be made available in New Jersey and New York in the coming weeks, with Michigan to follow later in the year.

Wynn Interactive is the online gambling division of Las Vegas-based casino giant Wynn Resorts.

Last week, BetMGM launched single wallet functionality in 14 US states as it looks to close the product gap on market leaders such as FanDuel and DraftKings.

Wynn or lose?

The Nevada Independent this week brought us the story that disgraced former casino mogul Steve Wynn is set to pay $10m to the Nevada Gaming Control Board to settle a now years-old dispute.

Further to the eight-figure fine, Wynn will agree never again to have any involvement in Nevada’s gaming industry.

Under the terms of the agreement, he will no longer be able to serve as an officer or executive with a Nevada gambling firm again, but notably, will continue to be allowed to have “passive ownership” of under 5% of any such business.

The settlement relates to a four-year legal dispute between Wynn and Nevada’s gambling regulator, after it filed a five-count complaint against the exec in October 2019.

That complaint sought to deem Wynn unsuitable to hold a gaming licence in the state following allegations of sexual abuse and misconduct against female employees during his time as chairman and CEO of Wynn Resorts.

It came after a previous, 10-count complaint filed by the regulator against Wynn Resorts in February 2019, which led to the operator paying a $20m fine for failing to report and/or investigate the allegations of sexual misconduct against its CEO.

Wynn, one of the world’s richest people with a reported net worth of $3.2bn, currently lives in Florida and has denied the allegations.

According to the settlement, Wynn waived his right to a public hearing on the matter. However, if he violates any terms of the settlement, Nevada gaming regulators could move to find him unsuitable and he would face additional fines and disciplinary action. 

Wynn previously claimed gaming authorities held no jurisdiction over him since he resigned from his position at Wynn Resorts, sold his stock and relinquished his gaming licence in February 2018.

After all that, one thing’s for sure. Steve Wynn won’t be appearing in the boardroom of any Nevada-based gambling business again.

The big new poker boom

The Financial Times brought us something of a love letter to the world of poker this week, via senior data journalist Oliver Roeder.

Roeder sets out what’s going on behind the latest poker boom, which saw more than 10,000 individuals take part in the World Series of Poker (WSOP) in Las Vegas over the past few weeks.

He takes us back to the first so-called poker boom, tracing the game’s explosion in popularity back to the Moneymaker case of 2003.

The aptly named Chris Moneymaker was a Tennessee accountant who gained access to the WSOP Main Event via an $86 online qualifying tournament.

He went on to shock the world by winning the event, including the $2.5m top prize, while his unexpected victory was broadcast on television. 

“His victory coincided with the spread of online poker, and countless new players logged on, dreaming of big money,” Roeder writes.

Now, 20 years later, Roeder suggests the impact of the Covid-19 pandemic has helped contribute to a second wind in the poker world, and another boom helping bring new players into the game.

“The pandemic sapped social interaction and necessary human-to-human contact, friendly and probing and competitive,” Roeder says. “These qualities are found in high doses at the poker table.”

Indeed, the numbers don’t lie, and as this year’s Main Event wraps up, the WSOP can celebrate its best-ever event in terms of attendance.

Roeder also sets out the stories of some key characters helping usher in a new generation of poker players – from superstar Daniel Negreanu to former editor-in-chief of FiveThirtyEight, Nate Silver.

In the end, he concludes, it’s the human touch of playing face-to-face that is now driving the resurgence in poker’s popularity.

The existence of machines capable of superior mathematical reasoning “does not deter us, nor does it diminish our human striving to play this game well,” he writes.

“We still play poker. We even still play chess. We still run foot races despite the existence of cars. We still write despite the existence of chatbots. We row on against the current.”

Row on, new poker enthusiasts. Row on.

Not so free-to-play

The Guardian this week put out a report on the increasingly blurred lines between mobile gambling and so-called free-to-play casual gaming.

It tells the story of Carrie (a pseudonym), who one day found herself writing a suicide note addressed to mobile game developer Zynga.

A recovering gambling addict who had self-excluded from using online casinos, Carrie had found that she could seek out the dopamine hits her addiction previously craved from gambling from another source, namely ‘casual’ games like those created by Zynga.

“Zynga deliberately uses the same techniques that bookmakers do with slot machines to feed people’s addiction and now I find myself addicted with no way out,” she wrote to the company.

Indeed, Carrie is not the only person commenting on the increasingly hazy distinction between online gambling and ‘free-to-play’ games, most of which in fact rely on a ‘freemium’ system which allows players to progress in exchange for cash.

Gambling and casual gaming “are rapidly converging,” The Guardian reports, as tactics for getting punters to part with cash are shared across both industries.

The report outlines several of the “tricks” used by game developers in the free-to-play and real-money sectors, as revealed by the founder and former CEO of game developer Tribeflame, Torulf Jernstrom, in 2016.

Readers are encouraged to access the full article to see quite how far mobile gambling and FTP gaming have converged, and to better understand the impact of that convergence on vulnerable people.

The article also offers projections on the size of the mobile game market, expected to reach over $100bn by 2025, and explores how the companies involved have in many cases imitated gambling firms in their hunt for high-spending ‘whales’.

Free to play? Maybe not so much.

Vincent Zahn has been recruited as the new executive vice president (EVP) and chief financial officer (CFO) for Hard Rock International and its parent company Seminole Gaming.

Zahn will be responsible for overseeing the accounting, financial planning, risk management, treasury, corporate finance and capital markets execution of Hard Rock International and other gambling brands under the control of Seminole Gaming.

He will also contribute to the overall strategic development efforts of the company while reporting to Jim Allen, chairman of Hard Rock International and CEO of Seminole Gaming.

“Vincent’s expertise and background in casino gaming and financial markets make him an invaluable asset to the global growth of our organisation,” said Allen. “We are excited to welcome him to the leadership team.”

Zahn boasts more than a decade of experience in finance roles at public gambling and entertainment companies.

He began his career on Wall Street as a gaming and hospitality equity analyst for Bank of America Merrill Lynch before moving to Pinnacle Entertainment, where he worked as VP and treasurer for seven years.

Zahn’s most recent role at a public gambling company came as SVP and treasurer for US casino giant Wynn Resorts between 2019 and 2022.

Earlier this month, the US Court of Appeals in Washington handed down a major ruling in favour of the Seminole Tribe of Florida, potentially opening the door for sports betting in the state.

The federal court invalidated a lower court ruling that had blocked a $2.5bn deal between the state and the Seminole Tribe, which had briefly allowed for online betting in 2021.

“It is a positive outcome for the Seminole Tribe and the people of Florida, and for all Indian Country,” said the company at the time. “The tribe is fully reviewing the decision to determine next steps.”

However, the tribe must carefully consider whether to relaunch mobile sports betting in Florida again, with the above court case likely soon headed for the Supreme Court.

In March, London-listed supplier Playtech invested $85m in Hard Rock Digital, the online arm of Hard Rock International.

Wynn Resorts’ online casino and sports betting app WynnBET launched in the state of West Virginia yesterday (22 June).

West Virginia is the 11th US state where WynnBET is live. Crucially, it represents the third state in which WynnBET offers online casino, alongside Michigan and New Jersey.

The app is available to download from the Google Play Store and Apple Store and includes classic casino games, live dealer blackjack and roulette, video poker and keno games.

Typically, the operator is offering bonus incentives to boost customer acquisition.

For example, new casino users are eligible for a deposit match of $1,000, while sportsbook players will receive $100 in free credit if they wager the same amount in real money.

“We would like to thank the West Virginia Lottery Commission for working with us throughout our licensure process in the state,” said Wynn Sports Interactive president Ian Williams.

“We are thrilled to bring our first-class online casino and sportsbook to players in West Virginia, marking our second state launch this year and the third iCasino market to our growing portfolio,” he added.

The WynnBET brand belongs to Wynn Interactive, which is the online gaming division of Nasdaq-listed land-based casino giant Wynn Resorts.

The app is currently live in Arizona, Colorado, Indiana, Louisiana, Massachusetts, Michigan, New Jersey, New York, Tennessee, and Virginia, as well as West Virginia.

The company expects to confirm further expansion into US states shortly, with several licence applications pending.

How do you solve a problem like crypto?

In the Financial Times this week, business columnist Helen Thomas argued that governments shouldn’t treat crypto like gambling – “even if it is largely pointless.”

Reporting from the world’s “biggest bitcoin event” in Miami, Florida – where attendance was about half as strong as it had been this time last year – Thomas noted that “some of the buzz and meme coins are gone,” as was the crypto industry’s “sense of indestructibility.”

Having faced several major challenges and crises over the past 12 months, the world of crypto has battled against those who would seek to bring it down.

Not least among them are governments, with US agencies launching “a slew of enforcement actions in the sector,” and politicians in Westminster recommending cryptocurrencies be regulated as gambling.

For Thomas, that meant “an influential parliamentary committee suggested that crypto was, not disruptive or renegade, but worse: borderline irrelevant.”

Indeed, parliamentarians in the Treasury select committee judged currencies like Bitcoin to have “no intrinsic value” and serve “no useful purpose,” instead suggesting that trading cryptocurrencies was hardly different at all from backing the favourite in the 5:50 at Sandown or lumping it all on 17 in roulette.

This “dismissive” approach was wrong, in Thomas’ view, as she argued that even though cryptocurrencies themselves may have failed to clearly elucidate the use cases of distributed ledger technology, that doesn’t mean it is totally without utility.

“The industry still does a very bad job of explaining things,” said Oliver Linch, chief executive of Bittrex Global. “It’s been wink wink … if you know, you know, to the moon nonsense.”

Lawyer Marc Jones went on to suggest that “to say [cryptocurrency] is gambling makes no sense legally,” with Thomas adding that it also wouldn’t contribute to effective regulation of the sector.

And all this at a time when “UK gambling regulation is still trying to catch up with the invention of the smartphone.”

Still, there remains a challenge in working out who exactly should be looking after the crypto sector – should it be the gambling world or the finance world?

Thomas suggests that “dividing responsibility between regulators would be a mistake. The crypto universe doesn’t neatly split into conceivably useful and definitely pointless.”

For the time being, she suggests that financial regulators still seem the most likely contenders for the position of Bitcoin watchmen in the future, with the latest report “unlikely to prompt a change of direction from the government.”

Unlikely, perhaps. But stranger things have happened.

UAE casino still a gamble

Wynn Resorts’ much discussed project to bring the first casino resort to the United Arab Emirates was the subject of another story in Forbes this week.

The article suggested that the cost of developing the resort is likely to push the local government of Ras Al-Khaimah – one of the seven emirates that make up the UAE, and the first to develop plans for a casino – into a fiscal deficit.

The integrated resort is expected to open its doors in 2027 after ground was first broken on the project earlier this year.

For a small economy like Ras Al-Khaimah, however, Forbes said “the project represents a giant gamble.”

The development is set to cost close to $4bn, equivalent to some 32% of the emirate’s total GDP last year.

RAK Hospitality and Al-Majran Island, two state-owned companies, are developing the project together with Wynn and are assumed to hold a majority stake in the venture once it’s up and running.

According to a report from Fitch Ratings, however, the resort is expected to “weigh on public finances initially” before boosting growth prospects and national revenues in the longer term.

The development will likely push the government’s budget into a 0.1% deficit this year and 0.2% in 2024, according to Fitch, as a result of the cash injections needed to build the resort.

On the upside, however, the ongoing construction work should boost the emirate’s GDP by one percentage point this year and three points in 2024, with real GDP in those years set to grow 4.4% and 5.1% respectively.

And, with the resort set to be the only destination of its kind in the surrounding region, there’s no telling how much it could generate once it arrives.

A fine mess at Meta

Dominating discussions earlier this week was Meta’s record-breaking €1.2bn fine in the EU, as reported by Bloomberg, which was levied on the social media giant just a couple of days before the fifth anniversary of the introduction of the General Data Protection Regulation (GDPR).

The Facebook owner was ordered to cough up, and to stop transferring user data to the US within the next five months, after regulators said it had failed to protect personal information from American security services.

The Irish Data Protection Commission said continued data transfers to the US didn’t address “the risks to the fundamental rights and freedoms” of the people the data belonged to, and were promptly deemed unlawful.

The decision had been widely expected, according to Bloomberg, as there was already some precedent here. The last time Meta’s transfer of data between the EU and US came to under inspection by regulators in 2022, the company threatened to pull its Facebook and Instagram services out of the region entirely.

This time, Meta said it would appeal the latest decision, which it described as “flawed” and “unjustified”. It will also immediately seek a suspension of the banning orders on its transfers of data, which it said would cause harm to the “millions of people who use Facebook every day.”

According to Meta’s chief legal officer Jennifer Newstead and former UK Deputy Prime Minister Nick Clegg (who for some reason is now Meta’s president of global affairs), the rules risk chopping up the internet “into national and regional silos, restricting the global economy and leaving citizens in different countries unable to access many of the shared services we have come to rely on.”

Any appeals from Meta will have to be filed in Ireland, and will take months at best to be resolved.

It seems that while the internet might make it seem like we live in a world without borders, that doesn’t mean companies like Meta can simply ignore them.

GAN has reported a reduction in both B2B and B2C revenue in Q1 as the firm’s formal strategic review continues.

Topline numbers

GAN’s Q1 2023 revenue slipped by 6.3% year-on-year to $35.1m as the business saw reductions across both its B2B and B2C business segments.

B2B revenue took the biggest hit, falling 13.7% to $11.3m, while B2C revenue fell by 2.4% to $23.9m.

The reduction in B2B revenue was the result of a renegotiation of the company’s contractual revenue rates with its largest customer in that segment, FanDuel.

The revenue left the business with adjusted EBITDA of close to zero, at just $39,000. That represented a significant decline from the $3m in adjusted EBITDA reported in Q1 2022.

Despite posting an operating loss of $6m (down from a $4.1m operating loss in Q1 2022), the business declared a net income of $1.5m after accounting for a $9.3m gain on the amendment of a content licensing agreement alongside for interest, tax, amortisation and depreciation expenses.

The $9.3m gain came from changes to an agreement with Ainsworth Technologies, under which GAN issued 1.25 million new shares to the business in order to reduce the cost of exclusively licensing its iGaming content by $15m.

Posting a net profit for the quarter represented a significant turnaround from the $4.5m net loss posted in Q1 2022, and gave the business earnings per share of $0.03, compared to a loss per share of $0.11 in the prior year.

News nugget

A formal strategic review process continues at GAN after it was initiated in Q4 2022.

During Q1, the company executed the plan’s three initial steps, namely the reduction of its future cash commitments to Ainsworth Technologies through its content partnership, the restructuring of its debt obligations to reduce interest expenses and the removal of its B2C Coolbet brand from the Ontario market.

On the firm’s Q1 earnings call, CEO Dermot Smurfit said: “While each of these steps are immensely positive in isolation, the strategic review continues forward and we will update the market when appropriate.”

The business’ new strategy consists of focusing on its B2B efforts in North America via GAN Sports and B2C operations in Latam via Coolbet, where it said the rate of return on investment is significantly greater than in higher-cost markets such as Ontario.

In the B2B division, meanwhile, GAN has renewed an exclusive partnership with FanDuel for the provision of its iGaming platform and PAM in the US and Ontario.

While the contract renegotiation was blamed for the reduction in GAN’s B2B revenue in Q1, the business said the dip was partially offset by an increase in FanDuel’s share of the North American iGaming market.

The business has also begun the process of rolling out operations with Wynn Resorts, with “a very large number of markets going live this summer” with the casino operator.

GAN first rolled out operations with Wynn in Massachusetts, for both land-based and online sports betting, which Smurfit said was a “super positive rollout” and garnered significant attention across the industry.

In addition, pending regulatory approval in Nevada, GAN expects to go live with Station Casinos this summer, which Smurfit said he thinks will be “a massive and highly impactful industry-wide shift in the tectonic plates of vendor infrastructure provision in major gaming markets.”

Smurfit concluded that the business expects to onboard further new B2B clients for its GAN Sports offering throughout 2023.

Best quote

Best question

Chad Beynon from Macquarie Group asked GAN’s CEO what progress the business had made in Mexico and if the business is still “as excited” as it was about the market when it announced its renewed focus on Latam earlier this year.

In response, CEO Smurfit said the business is still excited about Mexico, but that launching there has been “perhaps a little bit slower out of the gates than we anticipated at the very beginning of this year.”

Smurfit added that early indications in the market are positive, however, and that “as with all new market entries, you have to be very, very patient and optimise the conversion funnel to new depositing players before you start allocating significant amounts of marketing capital.”

The business therefore expects to continue optimising its product, he said, although it has been “extremely well received in all the Latin American markets that it’s rolled out into.”

GAN’s renewed focus on Latam markets has therefore left the business “very excited about the B2C division and the return to growth prospects after a relatively pedestrian growth performance in 2022, which is behind our expectations,” Smurfit said.

“But the indicators in the current quarter and looking forward through the year are very positive,” he concluded.

Current trading and outlook

Due to the continuing strategic review, GAN declined to provide any earnings guidance for the rest of 2023.

“The variability of potential outcomes prevents us from providing an outlook within a reasonable range,” Smurfit said, “although we expect to be in a position to provide guidance for the year upon the resolution of these discussions hopefully in the near future.”

In the company’s Q1 report, the business said it was assessing a range of strategic alternatives to maximise shareholder value. 

Alluding to the possibility of a sale of the business, it added: “There can be no assurance that the review process will result in pursuing or completing any transaction, and no timetable has been set for completion of this process. 

“The company will provide updates, as appropriate,” it concluded.