Esports Entertainment is well positioned to capture the growing market. The company has online gambling licenses in nearly 150 countries, a world-class betting platform, hundreds of partner partnerships, and a strong management team.
Advertisers and sponsors are quick to choose sports because of their attractive demographic characteristics.
Sports fans are, on average, young (about 26 years), relatively wealthy (one-third earn more than $ 90.00).
Eports has tremendous global appeal.
Esports Entertainment (GMBL)
Recently, Public Esports Entertainment (GMBL) offered the most flexible and transparent online gaming platform for $ 3.6 billion. We started the coverage with a long-term buy recommendation and a price of USD 7.00.
Numbers cannot be added because of rounding.
Investment thesis
The eSports fan base is growing rapidly and is expected to reach 590 million by 2022. Global gross sales are estimated at US $ 3.6 billion.
The company added gambling licenses to Britain and Ireland via acquisitions in July and obtained its first US licenses in August through partnerships with casino operators in New Jersey.
Esports Entertainment has nearly $ 12 million in acquisitions, platform development, and tournament hosting. Management is the benchmark for FG: 21 sales of $ 13 million.
We started the coverage with a long-term buy rating and a price of $ 7.00, which is a multiple of FG’s estimated sales: 21.
Risk
The company has accumulated a net loss and perhaps a few years from continuing operating profit.
INVESTMENT TEST
Esports Entertainment Group is an emerging leader in online gambling and the fast growing multi-billion dollar sports betting market. Esports is a relatively new segment of online gambling consisting of competitive video games played by individuals and / or cash prize teams. The company has developed an innovative betting platform that offers betting enthusiasts better odds and greater transparency in a secure online environment and, through the acquisition of Argyll Entertainment in July, offers a first-class customer loyalty program. Esports Entertainment has accepted online betting from fans from Canada, Japan, Germany and South Africa and recently acquired a gaming license in Malta which has been expanded to nearly 150 jurisdictions including a number of EU member states.
Through the acquisition of Argyll Entertainment, Esports Entertainment also received game licenses in the UK and Ireland as well as around 200,000 registered online players. The New Jersey gambling license is granted through a corporate partnership with Twin Rivers Worldwide Holdings (TRWH). This partnership provides the US with initial support that Esports Entertainment plans to expand to other countries.
Massive cyber audience and cheap demographics. The sports fan base is growing rapidly and is projected to reach 590 million by 2022. Audience growth has been particularly strong this year due to the Coronavirus blockade, which halted traditional sports and attracted millions of new fans to online sports tournaments and events. Advertisers and sponsors are rapidly adopting exports, not only because of audience size, but also because of compelling demographic data. Sports fans are on average young (around 26 years old), relatively wealthy (1/3 have an income of over $ 90.00), and diverse geographically. Even non-endemic brands (i.e., products or services not related to exports) started sponsoring these events. Previous Esports Entertainment sponsors include Red Bull, KFC, Microsoft, Lenovo, Activision, and Konami.
Highly qualified management team. The company’s management team has extensive experience in online gambling, IT and sports. CEO Grant Johnson has led the company since 2013, and CFO Daniel Marx was previously CFO of Argyll Entertainment for five years.
The advantages of the betting platform. Esports Entertainment has developed its own online betting platform that offers better odds and more transparency than competing platforms as well as an intuitive gaming experience that feels fairer. The company plans to move the recently acquired Argyll business to its own platform, resulting in annual cost savings of over $ 1.0 million.
Worldwide game license, the first license secured in the US. The company received a gaming license from the Malta Gaming Authority in May which allows it to accept bets from residents of nearly 150 countries on its website. Malta’s online pool betting license is valid for 10 years and is renewable. The recent acquisition of Argyll Entertainment licensed Esports Entertainment games in the UK and Ireland and more than 200,000 registered users.
