B2B Momentum Builds For GAN With US Still in ‘Early Innings’

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A strong second quarter continued into the third quarter for technology provider GAN, which has plenty of upcoming opportunities.

GAN is primarily a B2B tech provider for online US sports betting and iGaming, though it is preparing a retail push as well. That will be another addition to GAN’s portfolio to help address the US and Canada, CEO Dermot Smurfit said:

“At the highest level of our shared opportunity, we remain in the early innings of the rollout of the U.S. market with a total addressable market widely believed to exceed $30 billion between online sports and iGaming expected within just a few short years. This is also newly complemented by the incremental Canadian TAM of up to $5 billion annually in an equally rapid time frame.

“So North America is where we are and where we will remain focused as a market-leading B2B vendor for many years to come, with B2B market leadership reinforced by the momentum in our B2B segment which continued to deliver growth quarter on quarter.”

Breaking down GAN performance

Total revenue hit $34.6 million in the second quarter with a nice boost coming from recently acquired Coolbet. Gross operator revenue for its B2B segment grew 3% to $221.4 million.

That operator revenue continues to grow as GAN launches with new customers. There were six notable launches in the quarter:

Positive momentum for both the B2B and B2C segments continued into the third quarter, Smurfit said.

GAN’s balance sheet remains strong with $52.1 million in cash and no debt.

No New York bid for GAN

GAN spent a lot of time looking at multiple bids in New York but said it could not make the numbers work.

There was no path to a positive return on investment, Smurfit said, echoing what Tioga Downs owner Jeff Gural told LSR. That does not mean GAN is done with New York, though.

While the rollout of mobile NY sportsbooks should not be affected by Gov. Andrew Cuomo stepping down, Smurfit hopes iGaming gets a boost:

“… remain cautiously optimistic that continuing opportunities to deploy as a platform for commercial operator participants or New York’s tribal operators remain open to us in the near term, together with longer-term iGaming opportunities now widely expected to emerge consequent to recent political regime changes.”

Confident about Canada

Single-game sports betting in Canada will go live Aug. 27. GAN is keeping its eyes on the market and is particularly interested in the Ontario launch, which Smurfit expects in December.

GAN expects to be an active participant and early supplier in Ontario. Partnership announcements will come in the following weeks following finalized deals, Smurfit said.

A lot of tech GAN specifically developed for the US also fits into the regulatory and compliance framework for Canada, he added.

B2B tech growing more scarce

GAN’s value in the industry continues to rise as more and more of its supplier competitors get snatched up by larger operators to bring technology in-house. Penn National‘s $2 billion acquisition of Score Media is just the latest example.

That will not work for everyone, Smurfit said.

“Given the cost, technical complexity, and regulatory expertise required, we don’t see this as a realistic option for most casinos and foresee that some who try will ultimately fail,” he added.

But GAN is not hearing from just those companies without in-house tech. Even those companies that do have their own tech are still leaning on GAN’s platform in certain states as their tech teams can only handle so many launches, Smurfit said.

‘No concerns’ for Super Bowl surge

Super Bowl betting has led to more than a few operator issues on the day of the big game the past few years. Not for GAN, though, and that successful streak should continue.

GAN’s chief information officer and the entire tech team are “extremely confident” there will be no material technical issues during the Super Bowl.

“We went through this year’s Super Bowl flawlessly. Very, very happy with the massive step-up in activity in the platform year on year. And we’re looking forward to delivering the same flawless performance in Super Bowl early next year for all of our B2B platform clients. So no concerns at this point.”

GAN unveiling multiple items at G2E

GAN will look to pick up new customers at the upcoming G2E convention in Las Vegas with a couple of new products.

The most applicable is the retail sports betting platform, GAN Sports. Retail betting is only about 10% of the US sports betting market.

Those deals are not insignificant, though, as the economics are better for B2B operators, Smurfit said. Revenue shares are closer to 50-50 splits than about 10% for online agreements.