Inspired Entertainment Threatened With Nasdaq Delisting, Investor Lawsuits Over Missing Q3 Results

Gaming content creator Inspired Entertainment has received a warning from the Nasdaq Stock Exchange, threatening the company with potential delisting. The letter, which is a standard procedure, states that the company is not in compliance with Nasdaq Listing Rule 5250(c)(1) for its failure to submit its third-quarter financials on time to the Securities and Exchange Commission (SEC).

Losing its Nasdaq listing would mean Inspired shares would no longer trade publicly, which would significantly burden its shareholders. Fortunately, Inspired doesn’t face immediate delisting. The company has 60 days, or Jan. 22, 2024, to submit the form or to file a plan to regain compliance with Nasdaq. If it chooses to submit a plan and Nasdaq accepts it, Inspired could benefit from an extension until May 7, 2024, to regain compliance.

Inspired is a gaming content, hardware, tech, and services provider. It’s mostly known to online casino players for its line of virtual sports products. However, it also creates slots like the Reel King series.

Recently, Inspired tapped into a new, unique online casino product that could become popular with many operators. The company partnered with BetMGM in October to launch MGM Bonus City, its first-ever “hybrid dealer” online game. The patent-pending technology combines pre-recorded footage of live dealers with random number generator software. The technology allows for significantly reduced costs compared to live dealer games. A month after the BetMGM deal, Inspired also partnered with Caesars Interactive to introduce bespoke hybrid dealer games.

Why Did Inspired Fail To Submit Q3 Results?

On Nov. 8, Inspired announced that it identified accounting errors and would require additional time to file its quarterly reports. The errors were related to the capitalization of software development costs under the US Generally Accepted Accounting Principles (GAAP).

Due to the mistakes, the company said it would further review other financial statements and related accounting principles to ensure US GAAP compliance. Inspired added that it cannot determine if adjustments will be required.

Inspired added that previously issued financial statements from Jan. 1, 2021, onward should not be relied upon and must be restated. The company acknowledged “material weaknesses” in internal controls and plans to implement changes to address them. Inspired added that it believes changes won’t impact its cash position or business plan.

Inspired Could Face Investor Lawsuits

After the announcement on Nov. 8, Inspired’s stock price fell 29.52% and remains down 21.1% at the time of writing. That drop compounds a weak performance through the year, with the stock now down over 36% year-to-date.

As a result, Inspired is facing an investigation by several law firms for potentially violating federal securities law. That could lead to one or more class action lawsuits. Some of those firms include:

  • Block & Leviton
  • Bragar Eagel & Squire, P.C
  • Kirby McInerney LLP
  • Pomerantz LLP

About the Author

Chav Vasilev

Chav Vasilev

After years of managing fast-casual restaurants, Chav turned his passion for sports and occasional slot wins into a career as an iGaming writer. Sharing his time between Europe and the US, he has been exposed to betting and gambling for years and has closely followed the growth in the US. Chav is a proponent of playing responsibly and playing only at legal online sites. When not writing, you will find him watching and betting on sports, especially soccer, or trying to land the next big bonus on a slot.
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