Nasdaq-listed online gambling technology provider GameAccount Network (GAN) is continuing its expansion plans into the US market for which it recently acquired Malta-based online gambling operator Coolbet.

This week GAN reported on the 149.1 million euro deal reached with Vincent Group plc, Coolbet’s parent company. However, the US regulators still need to approve the operating license for the closing of the deal.

This acquisition is expected to be completed in the first quarter of next year. As part of the agreement, GAN will pay the Vincent Group € 80 million ($ 95 million) in cash and the remainder will be made through an exchange of GAN common shares.
The company claimed to have $ 57.5 million (€ 48.5 million) in cash in September but reported that it will “seek new capital in the coming weeks” to consolidate its balance sheet.

In 2019, the revenue generated by Coolbet exceeded 26 million euros, between casino games and sports betting. The earnings for the first nine months of this year were about 500,000 euros.

The company has gambling licenses in Malta, Sweden and Estonia and has a staff of approximately 175 employees, most of them in its offices in Tallinn, Estonia.

The Coolbet acquisition was with the goal of “adding the best-in-class sports betting engine to round out our real money iGaming platform,” said Dermot Smurfitt, CEO of GAN.

GAN is looking to expand its share of the US gaming and betting market by offering terrestrial operators “near-turnkey capabilities” so that they can more quickly transition to iGaming and online gambling.

GAN’s offering of Coolbet’s new services will be ready by the second half of 2021. However, Smurfitt announced that GAN customers will have the option to choose whether to remain with the provider’s third-party betting providers or decide to join the Coolbet platform.
Increased income and losses

Smurfitt believes that the company’s customers will choose the “significant competitive advantages” that Coolbet offers.
The news did not impact investors as believed, as GAN shares fell 5% at the end of monday. After GAN released its third quarter results came a sell off of shares.

Although the company’s revenue increased 86% year-on-year to $ 10.3 million (23% more than in the second quarter of this year). About 88% of these revenues were generated in the US market.

There was an 86.3% increase to $ 7.7 million from real money iGaming (RMiG) revenue. While simulated games saw an increase of 85.3% to $ 2.6 million.

RMiG’s gains were attributed by the company in large part to the ‘multiple deployments’ that were made to its platform in Michigan. This was done prior to the launch of online sports betting and iGaming in that state, including new GAN partners Wynn Resorts and Churchill Downs Inc.

But, the vendor’s cost of sales soared to nearly a third, while administrative expenses also soared an incredible 255% to $ 10.4 million. Most of these costs are due to the extraordinary growth of the payroll from 141 employees to 215. Along with the financial consequences left by the initial public offering presented by GAN in the spring.

The company’s high costs were reflected in a net loss of $ 4.1 million, compared to the loss of $ 1.8 million that occurred in the same period of 2019. In the first three quarters of the year GAN has had a loss of $ 12.4 million, while last year it was only $ 1.54 million in that same period.

The company was hit hard in the third quarter when FanDuel decided in late august to switch its sports betting operations to its ‘proprietary digital wallet’.

According to Smurfitt, the timing meant that GAN missed the september raise related to NFL betting. However, the income generated by online casinos remained “consistent” in terms of market share.


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