In The World Of Online Gambling — Keeping Costs Down During Growth Phase Could Make This Player A Stand-Out

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Growth costs money, and keeping those costs to a minimum is almost always a goal for expanding companies.

Most companies, regardless of the industry they’re in, must make important investments in marketing to help their expansion efforts, and different sectors have costs specific to them.  

Player acquisition is a significant cost in the online gaming industry. Acquiring just one user can cost up to $500 when registration and encouraging first-time users to make a purchase are taken into account, according to Golden Matrix.

But Las Vegas-based gaming development and licensing company Golden Matrix Group Inc. GMGI could be a stand-out because in its 80%-owned subsidiary, RKings Competitions Ltd., the acquisition cost per player is only a few British pounds.

United Kingdom-based RKings Competitions Ltd. is an online competition company that offers monthly prizes such as real estate, luxury vehicles and cash to about 25,000 active clients in the U.K. and Ireland.

Online gambling and e-sports companies such as DraftKings Inc. DKNG are experiencing slower-than-expected growth and continuing losses fueled in part by high player acquisition costs and marketing expenses, Golden Matrix CEO Brian Goodman said. 

In the last six months, DraftKings stock has fallen from a high of about $60 in mid-September to current levels of less than $20. Caesars Entertainment Inc. CZR has fallen from a high near $120 in early October to current levels less than $80.

“GMGI has been successful in not only keeping those costs and expenses to a minimum but also managing overall G&A costs, and always staying focused on the bottom line,” Goodman told Benzinga. “GMGI has delivered bottom line profitability and positive cash flow consistently over the years.

Moving Into Mexico

Earlier this month, the company announced it has applied for a Mexican gaming license and plans to introduce the RKings’ platform and successful business model in Mexico once the license is approved.

“This a logical move for the company, as it opens up compelling opportunities in the Latin America B2C (business to consumer) market; and it begins the expansion of the RKings’ tournament platform to our first region outside of the U.K. and Ireland,” Goodman said at the time of the announcement.

Developing robust B2C and B2B (business-to-business) segments have helped bring the company to its 14th straight quarter of profitability. 

In the three months ended Jan. 31, Golden Matrix reported revenue of nearly $8.9 million, which included revenue reported by the 20% minority ownership in RKings not owned by Golden Matrix. Net income for the period was almost $350,000.

Goodman stated that the latest quarter was the first financial reporting period including contributions from B2B and B2C verticals, and Golden Matrix is well-positioned for a strong 2022. The company will continue to evaluate acquisition candidates in both verticals to achieve more revenue growth and profitability while keeping costs down, counter to the prevailing trend, Goodman said.

“In our case, the core business rolls on and expands, and at the same time GMGI is making sensible acquisitions that are accretive to earnings,” he said.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice. 

Picture credit: Ben Lambert on Unsplash

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