I’m getting really tired of this lockdown game. Every year it’s just the same. Ontario, Quebec and California have already closed down essential businesses, and Yonge Street in Toronto is empty enough that it could be a stand-in setting for a post-apocalyptic thriller.
So far, BC’s premier, John Horgan, has resisted the lockdown call to send all of us skittering back to our holes for another 8-10 months, but as you can see from the below chart, it’s probably not going to last.
COVID-19 restrictions have been added. Masks on, folks. The Mu and Delta variants are going to add insult to injury for us double-vaxxer types, so gather your lists of friends and family to check in on during the shelter-in-place months and make sure you’ve got enough toilet paper. There’s no point in laying blame for lockdown season. We can’t pinpoint the anti-vaxers, or those Dunning-Kruger-clods who think they know more about epidemiology than epidemiologists and gather in large groups at third beach on the weekends, for this either. Not entirely, at least.
Some of the blame needs to go wider than that—education cuts and accountable politicians for two. If we offered better education standards and had more trustworthy politicians, people would know how to think and we wouldn’t be in this position where people trust Bob the YouTube Conspiracy Theorist Nutball over Bonnie Henry.
But you’ll have that. So we need to prepare for lockdown 2021.
Part of that preparation is for your mental health. Once you’ve got a roof over your head and food in your fridge, what are you going to do to while away the hours between sleeps? Netflix (and other streaming services) get tiresome. Maybe get some exercise? Yeah. Sure. We’ll get right on it. But when beating the same Playstation games over and over gets boring and you still want to play games, have some social interaction and maybe make some money on the side, there’s companies like FansUnite Entertainment (FANS.V).
FansUnite Entertainment is a sports and entertainment company in the legal online gaming sector. They deal with sports, esports and casino based games, providing underlying supporting technology to facilitate stay-at-home gambling and entertainment, but also operating a number of business to consumer (B2C) brands around the world.
So if you wanted to get your online gambling on with your friends and family in say, Romania, where they’re licensed (and where incidentally I have family) during your government imposed lockdown, that’s totally possible. Just mind the time zone gap. The company also is busy expanding by acquiring and growing its portfolio of games with growth assets in new or developing markets.
Ultimately, it’s a good space to be in right now with the looming lockdown. People are going to need something to do. Online gambling is expected to worth over $60 billion and is anticipated to reach $94 billion in 2024, according to Bit Rebels. As an aside, they factor in certain developments in augmented and virtual reality, which they state will accelerate their entry into the gambling world, making online gambling effectively another addition to the massive multiplayer genre of video games. But that’s getting a little ahead of ourselves.
It’s all about the timing
None of this would be possible if it weren’t for the general trends in online gaming, and gambling in particular, which have been leaning towards legalization. Let’s take the Professional and Amateur Sports Protection Act (PASPA), which was a law signed by President H.W. Bush in the 90’s, and struck down as unconstitutional in 2018. Now sports betting is legal in more than two dozen states in the United States.
Here’s how the map looks:
There has been one significant shift in the Canadian gaming regulatory environment of note in that the House of Commons pushed legislation to legalize single event sports betting and passed it through the senate on June 22 to get royal assent on June 29, 2021. The first single event sports bet happened on August 27, 2021.
Beyond that, though, we technically don’t have a law prohibiting online gambling, but we do have laws prohibiting any type of gambling at a non-government licensed establishment.
Even such, there’s 1,200 to 1,400 offshore websites offering casino type games. If you’re going to be in Canada and offering gambling operations, then Canadian authorities will be willing to prosecute, but have only done so once, when B.C.’s government went after Starnet Communications International, which was based in Delaware but run by Vancouver-ites, where one of the servers were located. SCI absorbed a $100,000 fine, forfeited $4 million in profits and went overseas. There’s also more to this story than just online gambling. There’s reason to believe that if it had have been just gambling, the government wouldn’t have cared, but there was suspicion of other nasty things going on there that weren’t ever substantiated.
Still, that’s more of an object lesson for the kind of company you should avoid when looking into this space. Fans exists as a counterpoint to a company like SCI in that they cross their T’s and dot their I’s when it comes to getting applicable licensing.
Another example of that is their partnership with OneComply, a compliance and licensing solution, which has been helping FANS get into more North American gaming markets. They’re serious about expanding and they’re serious about doing it the right way.
What are your lockdown options?
Their holdings include McBookie, Askott Games, Chameleon and Vamosgg.com
Askott Games
FansUnite picked up Askott Games in August of 2020 and immediately began reaping the rewards. The combination of FansUnite and Askott brought Askott the final piece of its puzzle—which was a sportsbook license and access to casino gaming—and in exchange FansUnite got into esports gambling with white label clients and a pre-existing membership base.
Askott delivers casino games to millennials between the ages of 21-35. They’ve released multiple titles and have plenty under development, with extensive distribution deals in place. Askott also joined forces with The Ear Platform, adding another 6,000 gaming options, including another revenue stream and accompanying marketing options. The Ear is a Italian-based European-focused aggregator that gives the company access to more than 120 online gaming sites. It’s licensed in Romania and adapted for major third-party games. Fans has since produced unique esports and video game casino games using Askott’s brand.
McBookie
McBookie provides betting services under a license to operations granted by the gambling commission in the United Kingdom. Their business to customer offerings delve into a vastly underserved market, focusing on the Scottish market and clientele. The company has been in operation for more than a decade, boasts 10,000 active members, has CAD$135 million in betting volume over the past three years, and includes sports betting, casino and virtual sports. For Q1 2021 alone, they pulled in $28 million in betting volume. They anticipate more courtesy of lockdown season.
Chameleon
Chameleon is FansUnite’s white label solution. They carry a complete business to business iGaming operation for esports, traditional sports and casinos. They also have two distinct offerings—these being turnkey and application programming interface (or API), which make it a flexible, easy-to-use gaming platform.
It also possesses a robust client dashboard with reporting and real-time analytics, including:
- Turnkey or API Solutions
- Fixed Odds, Parimutuel, Casino & Fantasy
- Customizable Front-end Experience
The Chameleon gaming platform also made the shortlist for the 2020 EGR B2B Awards for eSports Betting Supplier of the Year.
VamosGG
Technically, this isn’t a separate product or platform offering, but deserves its own mention. Vamosgg.com is the latest site to launch on the Chamelon betting platform. It’s the Latin American extension of FansUnite’s offerings, and showcases the platform’s flexibility to launch highly localized sites. At present, Chameleon supports 10 languages and can localize to additional languages if needed.
The Numbers
Before we get deep into the numbers for this company there’s a curious bit to note first: this company accepts crypto.
Normally this wouldn’t be worth much of a mention, but it might be the first publicly-traded B2B (and B2C) online gambling solution to actually implement a cryptocurrency payment service and wallet into their infrastructure. Now FansUnite’s tech can accept Bitcoin, Dogecoin, Ethereum, Litecoin, Bitcoin Cash and Tether, which with the exception of Doge, are the usual suspects when it comes to crypto. This still represents a fair amount of forward thinking compared to most other online gambling solutions.
“The integration of CoinsPaid allows us to offer payment solutions for our B2B partners who can now capitalize on the increasing popularity of cryptocurrencies,” FansUnite Entertainment CEO Scott Burton said. “As more companies begin to recognize the importance and utility of decentralized money, we are delighted to join a growing ecosystem where customers can make purchases with virtual currencies.”
The first noteworthy aspect (after crypto) of this company’s numbers is that they’ve recently closed a $24,792,390 financing, so they’re not short on cash, which is probably a good thing given how their various products and subsidiaries aren’t making a lot of money. Their revenue line for the three months ending June 30 has their revenue at $973,723, but they’re going into lockdown season and their through-line for revenue growth has shown development. At least up until their last three months.
Here’s the breakdown:
McBookie seems to be their biggest draw to date, pulling in 94% of their revenues. The company is looking to improve their marketing efforts using targeted campaigns around specific sports-events and encouraging customer interactions on twitter. They enjoyed moderate success in Q1, and were used when Scotland made it to the group stage at the Euro Cup in 2020.
Two other things stand out. The biggest stat-line on their assets column is goodwill and the second is intangible assets. Goodwill isn’t anything, really. It’s the value of a company’s brand, customer base, customer relations, employee relations, and proprietary tech given a concrete dollar amount to be attached to an asset category. You can’t use it to pay your workers, or trade it in for something to keep the lights on. It’s there to artificially improve your bottom line but has no actual practical use.
Why it’s separate from intangible assets is confusing, especially since it is an intangible asset insofar as it’s an asset at all. Intangible assets themselves include patents, intellectual property, and other non-physical (equipment and brick and mortar stores, for example) capital, which can be leveraged and turned into actual cash.
What I do like about this company is their confidence and growth trajectory. They’ve gone from literally four guys in an office to a working company of 33 people with attendant salary boost. And why not? This sector is white hot right now, and even though their bottom line could use a little massaging, there’s a strong probability that we’re going to see substantial revenue increases as their Chameleon and Askott Games platforms start getting serious traction courtesy of their overseas expansions, North American adoption and lockdown season.
Normally this is where I’d pop in a price-flow chart, but if you’re looking for technicals then may I suggest our resident chart wizard Vishal Toora’s excellent breakdown? You won’t regret it.
Mostly it seems like the chips are falling the way they should be for this company. The regulatory climate is positive, the gaming market is new but thriving and there’s a fair amount of interest, and this is a company that could even take advantage of any lockdown related stay-at-home orders that filter down from our overlords in Victoria or Ottawa. The only shortfall is the lack of revenue, and if they can get the word out, and take advantage of the unique circumstances we’re all enduring, not even that will be much of a barrier.
—Joseph Morton
Full disclosure: FansUnite Entertainment is an equity.guru marketing client.
