Diversifying Into Online Gambling is Not Always a Winning Ticket

With decades of experience in the online gambling sector, we have seen the rise and fall of many online casinos and betting sites. The main reason is not always a lack of resources or talented personnel, but a lack of understanding of the nuance and dedication that running a successful igaming business entails.

The most recent enterprise to realise that just adding an online gambling channel to its expansion plans is not a guarantee of financial success is the Esports Entertainment Group (EEG).

EEG Gets Back to Basics

Established in 2008, EEG has proven itself as a valuable player in the esports arena. However, the same cannot be said for its online gambling ventures, which include owning and operating licensed online casinos and betting sites in multiple regulated markets such as Spain and the United Kingdom.

Earlier this month, the Malta-based gaming business announced that its founder and Chief Executive, Grant Johnson, had stepped down, and ex-Mayor of Las Vegas, Jan Jones Blackhurst, has taken his place as Chairman of the Board.

Blackhurst said:

“Grant [Johnson] recognised the value of esports and online gambling and founded EEG on that basis. On behalf of the Board, we wish him well. The company is looking forward to bringing in new leadership to work with Board to realise the full potential of our acquired esports businesses."

The search is on for a new CEO to replace Johnson and lead the changes needed to keep EEG afloat. The company has confirmed that several candidates are in the final evaluation process.

 The Big Machine Is Moving Quickly

There is an adage that claims that necessity is the mother of invention. In the case of EEG, it has also become the mother of execution.

The company released a press release outlining the steps it is taking to reduce costs and divest its portfolio of products that “do not contribute to profits and cash flow”:

1. Sale of the company's online casino business in Spain. The sale of the online casino business in Spain is expected to close on December 12, 2022. The proceeds from the sale, net of commissions, will be used primarily to pay down the principal on the Senior Convertible Note.
2. Closing of the Argyll iGaming operations in the United Kingdom and Ireland on December 7, 2022, due to high costs to operate in these markets and an inability to generate profits.
3. Initiation of a process to evaluate the strategic options for the iGaming business, including exploring a sale of iGaming assets due to increasing regulatory burdens and competition.

One of the more interesting points, which was listed alongside a note that the company will continue to be listed on the NASDAQ, was that it had received a “non-binding letter of intent from a third party that offered to merge its assets, including intellectual property”.

EEG notes that the intent of the offer specifically states that its purpose is to see the "combined company" focus on gaining market share and growing revenues in the esports sector. More than anything else, this explains the quick pace at which the company is selling off its existing igaming assets.