Bidding Process Commences for EBET’s B2C Assets Amid Financial Struggles

Hilco Streambank has announced the initiation of the sale of EBET’s B2C assets, with bids due by 30 July, followed by an auction the next day. EBET, an operator of seven prominent igaming, online casino, and sports betting brands, is offering an extensive array of assets to potential buyers.

The assets under the hammer include valuable intellectual property rights such as trademarks, domain names, patents, and copyrights. Notably, the sale also covers customer and transaction data, front-end website code, and marketing service accounts and contracts. Adding an intriguing layer to the sale, EBET is also offering its interest as the plaintiff in pending litigation with the potential for monetary awards. Shares in certain subsidiaries enhance the bundle further, making it a substantial package for any interested buyer.

EBET’s brand portfolio includes well-known names such as Karamba, Hopa, Griffon Casino, BetTarget, Generation VIP, Scratch2Cash, and Dansk 777. Over the 12-month period leading to 31 March 2024, these brands collectively generated $21.0 million in revenue, with an active monthly user base of approximately 18,400 gamblers and an average first-time deposit around €127.

Richelle Kalnit, Hilco Streambank’s chief commercial officer, highlighted the opportunities inherent in acquiring these assets, stating, “A buyer of the assets has the opportunity to tap into a rapidly growing online gaming market and to expand upon the brands’ success by emphasizing and/or re-entering certain markets, re-engaging the large player database, and optimizing software and marketing operations.”

This foreclosure sale unfolds less than three years after EBET acquired these assets from Aspire Global. The initial acquisition was valued at $75.9 million and completed in December 2021, following an agreement reached a few months earlier. Back then, known as Esports Technologies, EBET envisaged this move as a gateway into tier-one regulated markets. Aspire’s licenses, covering regions like Great Britain, Germany, and Denmark, were seen as critical for this strategic expansion.

However, not long after rebranding in May 2022, EBET’s internal problems began surfacing. By August of the same year, the operator announced “significant measures” targeted at achieving profitability. This “profitability plan” aimed to generate positive monthly EBITDA immediately. Historical financial struggles added urgency to this plan, as EBET had been facing substantial losses even before its Aspire acquisition.

A major move within this plan included a dramatic 54% reduction in EBET’s total number of employees and contractors.

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. The company also shifted its focus more towards igaming, cutting back on investments in esports.

The company’s struggles continued, culminating in EBET launching legal action against Aspire around a year later. Filed with a Nevada court in December, the litigation outlined various allegations against Aspire, scrutinizing the claims made during the acquisition period.

The first major point raised was the alleged falsification of the number of player accounts reported by Aspire. EBET claims Aspire deliberately inflated these numbers to secure the acquisition deal. Other allegations include misrepresentations of expenses and revenues, notably inflating operating expenses to reflect an annual revenue of approximately €65.0 million falsely. EBET also accused Aspire of breaching representations and warranties in the share purchase agreement by providing inaccurate information.

One significant grievance highlighted in the lawsuit is related to Aspire’s handling of the process to secure an online gaming license in Germany. EBET contends that Aspire should have known it would not qualify for the German license due to missing a critical payment in the process.

The legal troubles didn’t stop there. Btobet, in a separate allegation, also took action against Aspire, claiming breaches associated with a special purchase agreement dating back to September 2020. This relates to Aspire’s €20 million acquisition of Btobet at the time.

Adding to the corporate drama, Aspire itself experienced ownership changes. Aspire was acquired by NeoGames in a deal worth SEK4.3 billion. Subsequently, NeoGames was acquired by Aristocrat for $423.5 million, integrating Aspire into Aristocrat’s newly-formed interactive division.

As the bidding process for EBET’s B2C assets commences, the market will closely watch how these high-profile assets will be absorbed and potentially revitalized by their new owners amidst the backdrop of ongoing legal and financial tribulations.

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