Ebet, formerly Esports Technologies, went on a shopping spree last year that saw it acquire all of Aspire Global’s B2C assets. Although the $75.9-million purchase made sense at the time, it’s now hurting the company.
Ebet purchased a group of gaming brands last October that included Karamba, BetTarget, and others. In addition, it had purchased Helix eSports and B2B software provider ggCircuit the previous year for around $43 million. Now, it is going to lay off the majority of its workforce as it looks to overcome financial hardships.
Although it recently reported earnings of just over $7 million for the first quarter of the year, the acquisitions created financial pressure that is still causing problems. In addition to letting go of some of its staff, it will make other changes in order to prevent further losses.
Looking for Solid Ground
Ebet announced that it is going to have to let 54% of its workforce go, including direct employees and contractors. At the same time, it plans on significantly reducing its focus on eSports in favor of online gaming in an effort to attract more immediate revenue.
In addition, the company’s marketing efforts and operations will face reductions. Any “non-material” contracts that cannot produce positive financial results are also on the chopping block.
Despite demonstrating positive revenue for the first quarter of 2022, the long-term outcome of the acquisitions is less favorable. The company previously expected to report $70 million in revenue for the year, but that is no longer feasible. However, it has not predicted what it expects to make after its internal cuts.
Ebet, which trades on NASDAQ under the EBET ticker, has not had the trading success it expected when it went public last year. It started at $25.35 on April 16, and reached a high point of $33.38 on September 3. For the most part, it maintained a strong position through November 12.
However, it began to slide after that, and hasn’t stopped. At the turn of the year, EBET traded at $20.56, its highest point of 2022. As of today, the stock is trading at just $2.25.
eSports Continues Global Growth
Ebet’s exit comes as eSports, as an industry, continues to grow. It has found traction over the past couple of years, which has drawn in global name brands as sponsors and organizers for events. In addition, in the US, it is rapidly becoming an accredited sport from the junior high school level through college, adding to its legitimacy.
NewZoo expects greater growth is coming. In a recent report, it predicted a compound annual growth rate (CAGR) in viewership of around 7.7% through 2024, with markets in the US, Brazil, and India gaining significant prominence.
That viewership accompanies an increase in participation, which is helping to attract more money. This, in turn, increases participation as well. As a result, by 2024, eSports revenues will reach at least $1.6 billion, according to NewZoo, representing a CAGR of around 11.1%. Last year, the figure was around $1.28 billion.
This also leads to an increase in eSports betting, as well. As most US states have legalized sports betting, they have included eSports. While the market segment is still only a small percentage of the larger sports betting market, it continues to grow. Where the market was worth around $12 billion two years ago, it could reach more than $20 billion within five years.
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