Rivalry earnings show strong tailwinds despite FY2021 net loss
Sharpr is a weekly newsletter covering the intersection of esports and betting
Hi everyone, Cody here.
Would you turn down a $10M sponsorship offer to promote a gambling brand? Well, that’s what one popular live-streaming personality did this week. That’s a lot of cheddar 🧀
Anyway, this week we take a look at Rivalry’s 2021 financial performance and a new piece of legislation in South Carolina that would allow residents to wager on esports, as well as fund accounts with cryptocurrencies.
Let’s dive in 🏊
In this week’s edition of Sharpr…
Rivalry earnings show strong tailwinds despite FY2021 net loss
South Carolina sports betting bill to allow esports wagering
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Rivalry earnings show strong tailwinds despite FY2021 net loss
Toronto-based esports betting and media company Rivalry has posted its latest financial performance report, detailing Q4 2021 and FY 2021 results.
The company reported a net loss of $18.93M in FY 2021 driven primarily by a sharp increase in overall operating expenses, its largest contributor being share-based compensations worth $8.19M. Rivalry CEO Steven Salz clarified that $8.2M is non-cash and connected to the valuing of options tied to the company's public listing on the TSX Venture Exchange in October 2021, thus the actualized net loss in fiscal year 2021 was $11.1M. Other key items from the financial sheet include:
An overall betting handle which grew 202% year-over-year to $61M – approximately 90% was derived from esports event wagers, while traditional sports events contributed the rest.
Revenue increase of 617% in 2021 to $8.84M, but offset by $6.94M in cost of revenue.
Customer registration totaling 610K in 2021, up from 350K the previous year.
Marketing, advertising, and promotional costs in 2021 of $4.72M (partially used to create zany ads like these).
“Our vision is to create the leading betting and entertainment experience for the next generation,” Salz said in a memo to shareholders. “We made considerable progress in 2021, and in 2022 we will raise the bar.”
Salz considered FY 2021 to be a “tremendous year” for the company which has hit several key milestones, including obtaining a bookmaking license from Australia's Northern Territory Racing Commission, the addition of mobile esports (like COD: Mobile and PUBG: Mobile) to its sportsbook, and a license to operate in its home market of Ontario.
The shareholder memo references three core beliefs the company has built its business around to better the company’s economics and profitability, which lean on brand love and product innovation, as opposed to using bonuses and promotion as a leading competitive advantage (a strategy deployed rampantly from top betting operators to questionable success).
The result of Rivalry’s strategy has reportedly delivered an approximate 90% decline in customer acquisition costs (roughly $50 per customer, Salz told Sharpr).
In its upcoming fiscal, Rivalry intends to focus on product growth, new markets, and “an expansion of Rivalry’s creative universe.” Amid these developments are a forthcoming mobile app, casino offering, and a deepened media strategy to further engage the internet generation.
🦈 Sharpr Take: Despite lofty increases in operational costs, Rivalry “grew in many of the right places” this year, as Hitmarker’s Adam Fitch put it.
Rivalry is scaling its operations to match the growth of its company, which includes hiring a global team to expand into new geographies and deepening its investment in technology, media, and content as a means to acquire new customers and establish brand loyalty.
These are expenses worth accuring for Rivalry, and with a strong market comprehension and distinct strategy, FY 2022 looks promising.
South Carolina sports betting bill to allow esports wagering
A new piece of legislation intended to legalize retail and internet sports betting introduced on April 21 in South Carolina would permit wagering on esports.
HB 5277, sponsored by Rep. William Herbkersman (R) and Rep. Todd Rutherford (D), represents the second time in three years a sports betting bill has been introduced by state legislators.
The bill classifies esports as a sporting event akin to other traditional sporting or athletic events.
Esports are defined as “a multiplayer video game played competitively for spectators, either in person or by means of a remote connection, in which success principally depends upon the superior knowledge, training, experience, and adroitness of the players.”
As part of the sporting event discipline, South Carolina residents would be able to engage in a range of wager types on esports events, including moneyline, pool, parlay, props, and in-play.
Legislators notably provide a specific callout of esports competitions which occur online in HB 5277. It’s a nod to the increase in remote esports events onset by the pandemic and sustained even as things start returning to normal.
Online esports competitions provide less oversight over matches, and ultimately less comfort from regulators who may already have reservations of the market, though. While not typically referenced in other state sports betting legislation, the inclusion of online esports events is a strong sign of bolstering the laws around competitive gaming in the Palmetto State.
HB 5277 would also allow bettors to deposit and be paid in cryptocurrencies.
Legislation will allow between 8-12 online sportsbooks to operate in the state.
If HB 5277 is approved, South Carolina will join a number of U.S. states with esports baked into sports betting laws, including Colorado, Connecticut, Louisiana, New Jersey, and more. West Virginia recently passed an amendment to include esports in the state’s legal sports betting industry whereas Iowa is pursuing similar legislation.
South Carolina’s current legislative session runs through June 15, permitting enough time to advance the sports betting bill.
🗞 In the news
Gaming Community Network has named Jenn Wong, formerly of Caesars Entertainment, as its new vice president of strategy and brand activations.
Oddin.gg has acquired esports betting marketing agency Thousand Lives.
The Chiefs inked a partnership with social betting platform Buddybet.
CS.MONEY will sponsor Pinnacle’s upcoming CS:GO tournament, Pinnacle Cup IV.
📈 By the numbers
Live-streaming personality Matthew “Mizkif” Rinaudo has reportedly turned down a $10M annual gambling sponsorship deal from an unnamed company.
Brazilian esports organization FURIA has reportedly courted a $3.2M sponsorship deal from cryptocurrency exchange FTX.
Microsoft’s Xbox gaming set record Q3 2022 earnings of $3.74B–the third consecutive year the company has achieved record-breaking revenue.