Canadian esports and online gambling company Rivalry is gearing up to license its proprietary online casino content to other gaming operators, said CEO Steven Salz.
In an earnings call last week, Salz said Rivalry expects to begin licensing its first-party casino games in the coming months, creating a new B2B revenue stream. Notably, its online casino segment was responsible for 60% of the company’s betting handle and 24% of gross gaming revenue (GGR) in the last quarter.
During the call, Salz told investors that opportunities exist in gray and regulated markets for Rivalry’s existing content catalog and a slate of games still in development.
Right now, we are zeroing in on a relationship that will distribute games across the world, I would say more [in] grey markets as an aggregator-type product, and also on a potential opportunity in a very large regulated geography with an individual operator that is going to look more like an exclusive relationship.
Precisely where “large regulated geography” may be remains a mystery, but the United States and Europe offer strong possibilities. Previously, Salz told Bonus Rivalry would wait to see how state laws evolve before considering taking its esports-forward brand to the US.
There is also no indication of which “individual operator” Rivalry is in talks with. However, several of the largest US online casino operators have been investing heavily in unique content, whether by outsourcing (e.g. Caesars’ bespoke content) or developing it in-house, like DraftKings.
Luongo: Interest in Casino’s Nostalgic Vibe ‘Validating’
Salz noted that deploying games to a grey market aggregator is relatively straightforward. However, he said Rivalry will need to acquire supplier licensing in regulated jurisdictions, complicating the process.
Operationally, he said, it is “not the easiest” to take a B2C business with in-house original casino games and transition to also serving a B2B market.
A larger, call it grey-market aggregator is a little quicker and easier. The regulated market one is a little challenging… Specific regulators and specific markets will have slightly different specs for the licensing of casino content that can be supplied.
In an email to Bonus, Rivalry’s communications head, Cody Luongo, said no further details are available due to ongoing licensing conversations. However, he noted updates will soon follow.
In the meantime, he said interest in Rivalry’s in-house casino games has been validating.
Our in-house casino IP has been very successful internally, and we feel that the interest we’ve received thus far in licensing them is very validating of our game development strategy, which is largely focused on developing products that are high in entertainment value and engaging for the next generation of consumers.
Bonus also asked about Rivalry’s apparent shift from its casino product’s Casino.exe branding despite maintaining its nostalgic 90s gaming vibe. Luongo said that interface change was necessary to handle all the games introduced since Rivalry initially launched its online casino.
While it was evident to us that the product was fun and novel for users, we had to adapt the interface to accommodate the volume of new casino games we’ve added since then… We’ve maintained the same high-end feel, UX, and vibe that resonates with a digitally native user who grew up on the internet and separates Rivalry’s product in the marketplace.
Rivalry Shifts Focus to Crypto, VIPs
Salz’s earnings call comments followed the release of Rivalry’s Q2 2024 earnings report, which highlighted mixed results for the Toronto-based company.
Despite a best-ever 62.5% net revenue margin of GGR and a 22% jump in net revenue to CA$4.7 million (US$3.5 million), its betting handle fell 22% year-over-year to $87.8 million (US$65 million). Further, Rivalry’s GGR dropped 12% to $7.4 million (US$5.5 million).
Salz noted that the results followed a shift in focus to cryptocurrency and VIPs. In May, the company began offering a Rivalry Token in markets (excluding Ontario) to attract higher-value bettors.
He spoke about the directional change in a release accompanying Rivalry’s Q2 earnings.
At Rivalry we have narrowed our focus primarily to two areas that are showing the highest potential for growth in our history: crypto expansion led by tokenization, and VIPs. Alongside these focused efforts, we are tightly managing working capital, rationalizing our teams, and cutting spend in areas that fall too far outside of these priorities.
This emphasis on VIPs, said Salz, marks a strategic course correction. Historically, while the company brought exceptional outcomes for most players, it “under-indexed” on players that drive online gambling revenues.
I have extreme conviction that the significantly above-market KPI’s we have driven for that majority of players, led by our obsessive dedication to their success, when now directed toward the smaller percentage of high-value players, that within this industry drives multiple times the value, will lead to a sizeable change in Rivalry’s business outcomes.
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