Esports Entertainment Group to “renew” esports focus amid restructuring
Sharpr is a weekly newsletter covering the intersection of esports and betting
Hi everyone, and hello from sunny Charleston, South Carolina.
My partner and I are down south for a week trying this digital nomad thing out. We arrived today and I’ve been awake since 3:00 a.m. so my thoughts are probably a bit skewed, but I do find myself missing the home routine that sets my day off right. Will provide an update on the latter half of this development next week.
This week, Esports Entertainment Group shares jumped 27% following remarks from CEO Alex Igelman in a letter to shareholders detailing company restructurings and operational objectives.
Let’s roll.
In this week’s edition of Sharpr…
Esports Entertainment Group to “renew” esports focus amid restructuring.
FURIA renews PokerStars partnership in new multi-year deal.
Rivalry to report Q4 and FY22 financial results on April 26.*
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Esports Entertainment Group to “renew” esports focus amid restructuring
Esports Entertainment Group is planning to deepen its B2B operations and renew its esports betting focus, CEO Alex Igelman said in a letter to shareholders this week.
Igelman, who stepped in as EEG’s chief executive following Grant Johnson’s dismissal last year, says the company plans to offer an Idefix-based B2B platform for sale and distribution to third parties.
EEG wants to take “a renewed focus” on esports wagering, offering new betting content and offerings operating under its MGA license – Igelman says its in the process of integrating Oddin’s iFrame solution.
In the US market, EEG intends to focus on its B2B esports offering, e-simulator tournaments (AI-generated or closed circuit esports matches) and notes a significant near-term opportunity within the scholastic market.
The company plans to “enhance” its esports tournament software ggCircuit with integrations to support built-in esports wagering content, presumably similar to how LANDuel functioned.
EEG is also engaging in a number of cutbacks to narrow its operational deficiency and debts, including divesting or shuttering “non-core business lines.” The company has already begun making good on this promise, selling a number of esports and iGaming assets including its gaming venue company Helix eSports, sportsbook subsidiary Bethard. And of course, let’s not forget its New Jersey-licensed esports-dedicated sportsbook Vie, which bit the dust in October.
EEG has also reduced its workforce from 158 full-time employees to just 99 staffers since Igelman took over in December.
Annualized salaries are expected to decline by approximately 36% as a result of these actions, lowering operating expenses by $4M on a yearly basis.
Apart from Igelman’s appointment in December, Michael Villani has been promoted to interim Chief Financial Officer on the management team. Villani previously served as the CFO of a Geneva-based hedge fund and held other senior accounting roles at publicly listed companies. Broader management restructurings included the elimination of senior leadership positions that were “not aligned with the future direction of the company.”
At the time of writing, EEG’s stock is up 27% to $2.43 since issuing its shareholder letter on Monday.
🦈 Sharpr Take: EEG is shedding weight like a prizefighter.
The company has dramatically scaled back its business, particularly when I think back to the frenetic acquisition spree EEG was engaging in some two or three years ago, scooping up betting operators and esports assets one after the next.
But again, Igelman is making good on his promise to continue scaling down the “non-core” assets, identifying cost saving opportunities, and threading an operational strategy that paves way for a sustainable business model.
With that being said, there’s still a lot of ground to cover under this new strategy, and the impact of this shift ultimately remains to be seen.
I do see a strong use case for a skill-based betting product on college campuses where sports games like FIFA and Madden NFL dominate head-to-head dorm room matches in between classes.
The focus on “e-simulator” products, which is either describing AI-played matches of FIFA or Madden, or closed circuit esports matches (similar to SIS Competitive Gaming), however, is a much less appetizing endeavor in my opinion. These products are regularly billed as “esports” but far from it in reality, comparing computer-generated matches and random, no-name players competing to professional esports athletes with tens of millions of combined followers where the largest events are streamed to hundreds of thousands of viewers at once. It’s simply not offering the same value proposition.
FURIA renews PokerStars partnership in new multi-year deal
Brazilian esports team FURIA has renewed its partnership with online poker platform PokerStars.
The new multi-year deal builds on a three-year relationship initially established in November 2020.
PokerStars will receive physical and digital branding on FURIA’s competitive jerseys and social media content.
The pair will also host a series of poker tournaments where fans can compete against FURIA players for prizes.
Prior to founding FURIA, Co-CEO André Akkari was a PokerStars ambassador and professional poker player, making way for a successful collaboration.
As for PokerStars, the company has a checkered background in esports, weaving in and out of the space over the years. Its first collaboration dates back to May 2016 when the company sponsored a trio of Team Liquid players. In 2017, PokerStars parent company (now Flutter Entertainment) announced the launch of “Power Up,” a competitive digital card game meant to target an esports-focused audience, which was shuttered two years later.
🗞 In the news
GRID has promoted Dominika Maria Szot to head of marketing.
Rivalry will report its Q4 and FY22 financial results on April 26.*
DraftKings topped the betting handle share in Massachusetts in March.
📈 By the numbers
League of Legends esports event drove an estimated $1.6M in economic impact for Raleigh, North Carolina.
New Jersey gambling revenue increased by 15% to $487.4M in March.
The Super Mario Bros movie has topped $500M at the box office worldwide.
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*Disclaimer: I am a full-time employee of Rivalry.
Welcome to sunny Charleston, SC, Cody! If you need any recommendations a QUICK guide: Folly is the best beach but leave early otherwise traffic is bad (left side of Folly is better), if you like nightlife Rec Room downtown is the coolest dive bar in America, and going to see Fort Sumter is a really cool experience!
Great write up as always