The group agreed to sell the Bethard online casino and sportsbook business in February for €9.5m. The sale completed later in the same month with EEG offloading the business in full.
Esports Entertainment also noted the winding down and eventual liquidation of Argyll entities. Revenue-producing operations were ceased in December, with this having an impact on year-on-year comparisons.
However, despite this decline, CEO Alex Igelman remains upbeat about long-term prospects at EEG. He referred to the recent restructuring of the business and how this will support its growth and help reduce costs.
Shortly after the end of Q1, EEG also agreed to acquire a 30% minority interest in esports content producer Drafted.gg. Igelman said this will further support its long-term ambitions.
“In recent months, we have thoroughly reviewed our company, focusing on the expected trends in esports and igaming,” Igelman said. “This review involved a detailed analysis of every aspect of our business, identifying unprofitable operations and contracts.
“We have taken firm actions, setting the stage for a bright future. While this restructuring incurred one-time expenses, the long-term benefits will far outweigh these costs as we continue to expect a yearly reduction in operating expenses of more than $4.0m.
“This is a transformative time for the company. It marks a fresh start and forging a path towards maximising our success potential, which we believe will lead to substantial revenue growth and increased long-term shareholder value.”
Revenue down across igaming and games segments in Q1
Looking to Q1, revenue in the three months to 30 September was down across both core segments at EEG. Revenue from igaming, comprising online betting and casino, fell 76.7% to €2.0m and gaming revenue from esports and other activities dropped 27.3% to €733,768.
EEG said its Lucky Dino business had been impacted by worsening investment and market conditions and regulatory changes in Finland and the UK from fiscal 2023. This, EEG said, continues to decline.
On the subject of geographical performance, US operations drew $733,768 of all revenue, with interactional activities generating $2.0m.
However, the sale of certain assets meant cost of revenue was slashed by 81.3% to $602,026 in Q1. Costs were also lower across sales and marketing and general and administrative, with total operating expenses falling 51.0% to $7.7m.
Net loss widens despite significant cost savings
After accounting for $214,989 in other income, pre-tax loss amounted to $4.8m. Despite the cost savings, this loss was still wider than $4.2m in 2022.
EEG did not pay tax, meaning net loss for the quarter was also $4.8m, compared to $4.2m last year.
However, adjusted EBITDA loss improved from $1.0m in Q1 of 2022 to a $354,870 loss this year.
CEO forecasts bright future for EEG
Concluding Q1, CEO Igelman swung back to EEG’s long-term vision. He said a renewed focus on developing initiatives to expand esports and igaming solutions will help to create a more comprehensive, end-to-end offering of online betting options for customers.
“Through our various partnerships, we have established a robust ecosystem that benefits our clients and customers alike,” Igelman said. “A key priority for us is maintaining the highest standards of gaming integrity and audit processes and we remain committed to ensuring that our content adheres to strict regulatory requirements for skill-based wagering.
“Our intention is to commission a thorough integrity audit of Drafted.gg by a third-party to meet state-by-state standards and support our expected rapid expansion within the sizeable US market.
“We are excited about the future prospects of EEG, fuelled by the potential of our strategic investments and are confident that the future is bright.”