In a worrying development for shareholders and the board of directors, Esports Entertainment Group (EEG) has reported that it has made a net loss of $35 million over the first half of the financial year 2022.
This has come due to a huge increase in operational costs, which has meant that a hefty rise in revenue of 1,088.4% has been offset by these losses.
The company reported losses of $9.1 million in the financial year 2021, so the new figure is a large increase on that.
In terms of total revenue, EEG has seen a massive increase from $2.6 million in the same period in 2021, to $30.9 million in 2022, which has largely been put down to EEG acquiring the betting service Bethard in July 2021.
There were numerous other positives for shareholders too which may well suggest that their investments, over the longer term at least, look more secure.
The company also launched Fiksukasino.com in Finland and EEG also agreed a deal with Game Fund Partners to join its venture capital section as well as planning a $300m game fund.
In addition, SportNation.com and Vie.bet online gaming sites, the latter which offers extensive esports betting alongside its sports betting and casino options, were moved to EEG’s own Idefix platform.
The company also launched Omega, a B2B solution under the ggCircuit brand which allows businesses to sign up to offer esports using a simple add on arcade-styled model.
In addition, just following the accounts being drawn up for the first half of 2022, EEG secured a license to offer esports betting in New Jersey, which could well prove to be a lucrative move in the long term.
Similarly, potentially lucrative deals with NFL teams the New England Patriots, Indianapolis Colts, Denver Broncos and Los Angeles Chargers have also been struck, while the group has also acquired a number of other companies such as Argyll Entertainment, EGL, Helix eSports and the aforementioned ggCircuit.
Last month, Stuart Tilly was appointed Chief Operating Officer of EEG and he has not yet had time to have a full impact in the role on these sets of figures.
Despite these positives, the disappointing financial results led to the CEO of EEG, Grant Johnson, making a statement on the difficulties that the business had faced in the first half of the 2022 financial year.
He explained that leaving the Netherlands betting market due to significant changes in regulation, had impacted profitability and that combined with a decline in sportsbook revenue from the traditionally strong European market and the delay of projects such as the LANDuel launch, caused by the global pandemic, had also had a major impact.
“Our fiscal second quarter results reflect a variety of challenges largely outside of our control, which together drove our first quarter over quarter revenue decline in more than a year,” explained Johnson.
However, he felt this issue would be a short term blip.
“Looking ahead, I believe our future is exceedingly bright as our newest products and the underlying strength of our European-based igaming and online sports betting business position us well to benefit from the organic growth potential in our two targeted entertainment verticals, igaming and esports,” he concluded.