GAN survives COVID-19, poaches ‘Tier-1’ client worth ‘$300-$400m’ per year


Online gambling technology outfit GAN says it’s weathering the impact of COVID-19 better than some, while pimping the imminent signing of a new ‘Tier-1’ US client.

Figures released Tuesday show GAN’s revenue in the three months ending March 31 fell by one-fifth to just under $7.7m, although the company was quick to note that Q1 2019 benefited from $4.9m from hardware sales and the licensing of the company’s ‘strategic US patent.’  

Adjusted earnings fell nearly one-third to $2.6m while net income fell over three-quarters to $500k, thanks in part to costs associated with preparing for the company’s initial public offering last month.

Real-money internet gaming (RmiG) software revenue more than doubled year-on-year to $4.7m in Q1 while RmiG service revenue shot up 63% to $1.5m. The company’s ‘Simulated Gaming’ aka free-play social gaming revenue suffered a 4.6% fall to $1.4m.

The US market accounted for 81% of GAN’s Q1 revenue, with Italy second at 15.6% and the UK/Channel Islands a distant third with a mere 2.7%.

GAN CEO Dermot Smurfit says his company dodged the worst of COVID-19, as online gambling activity in New Jersey and Pennsylvania saw a “notable increase” in the months of March, April and May. (GAN has a habit of issuing press releases celebrating market-wide results in states in which it operates, while rarely quantifying exactly how much of those gains GAN itself shared.)

Speaking on his company’s first analyst call, Smurfit said GAN had “reached an agreement in principle with a Tier-1 client that is looking to deploy our game stack technology in new addressable states such as Illinois, Tennessee, as well as Michigan and other states.” The deal remains subject to “significant conditions” but Smurfit said the company was “working hard to bring it across the line.”

Pressed for details, Smurfit said the Tier-1 opportunity is “at maturity [later defined as “within three years”] you’re looking at $300 million to $400 million in gross operated revenue annually.” Smurfit said the company was not one of its Simulated Gaming clients but GAN would be “displacing an existing provider that has been active in the US.” (Online speculation has pointed the finger at Churchill Downs Inc potentially being this mystery Tier-1 figure.)

GAN is redoubling efforts to jump-start its stalled Simulated Gaming vertical, as Smurfit claimed the company had binding term sheets for rolling out the free-play product with unspecified new clients in Colorado, Indiana, Mississippi and New Mexico. Dermot added that GAN uses such deals to obtain “a right of first refusal” on becoming a company’s real-money supplier if/when that state authorizes such activity.

GAN is also bolstering its in-house tech staff by “capturing scarce specialists in Las Vegas” who’ve been furloughed by land-based gambling device makers due to the pandemic-related halt in retail casino operations. The company started the year with 140 bodies on its payroll and currently stands around 190.

GAN added sports betting o its platform in September 2018 and Smurfit said Wednesday that he was surprised by the fact that in-play betting accounts for “substantially below 20%” of all bets placed with GAN’s US clients, compared to “70% to 80%” in some European markets. Smurfit said he expects there are “some years to go” before US in-play catches up to Europe.