The pandemic saw a surge in sports betting as people were cooped up at home and had extra discretionary income to spend. However, as inflationary pressures and a return to normalcy took effect, many found that their wallets could no longer afford the risk. As a result, companies like wagering tech partner Betmakers Technology (ASX: BET) have been hit hard.
Betmakers has seen its share price plummet 90% over the past 2 years, where cash has continued to exit the business to the tune of $16 million in net outflows for the months to March 2023. In 2021, the Company was set to acquire lottery and wagering company Tabcorp’s wagering and media arm for $3.5 billion, but the deal fell through when Tabcorp decided to split its wagering and lotteries division, resulting in two new companies on the ASX. It was an audacious bid by Betmakers whose market cap has since fallen to $165 million.
In response to these challenges, Betmakers has announced board and executive management changes aimed at optimising the full potential of the business. This includes a focus on operational disciplines, cost efficiency, and optimal capital management, with the aim of being operationally cash flow positive during H2 FY23.
In Q2 FY23, the Company invested heavily in platforms and international expansion, resulting in significant cost-base growth and a net cash loss of $5.9 million from operations. However, in Q3 FY23, it saw receipts from customers of $23.6 million, a 9% increase compared to Q3 FY22.
Some members have left its executive team while others have been appointed to new roles. Christian Stuart, who was formerly the North American CEO of the company, has departed from the business. On the other hand, Martin Tripp, who was previously the Chief Product Officer, has been appointed as the Chief Operating Officer, a new role in the company. Chelsey Abbott has also been promoted to Chief People Officer.
Plus, Matt Davey has been appointed as the new President and Executive Chairman of Betmakers. Todd Buckingham, who was previously the CEO, has been appointed to a new role as the Chief Growth Officer, and as part of his refocus, he has stepped down from the board. Jake Henson, who was previously the COO, has been appointed as the new CEO of the Company. Nick Chan, who was formerly the Non-Executive Chairman, remains on the board as a Non-Executive Director.
Betmakers is focusing on reducing and normalising its cost base in several areas. Product manufacturing and operating costs decreased by 13% compared to Q2 FY23, achieved through the right-sizing of systems and cloud hosting environments. Staff costs decreased by 8% compared to Q2 FY23, by reducing the use of third-party contractors and restructuring the company. Administration and corporate costs decreased by 25% compared to Q2 FY23, through a reduction in the use of third-party advisors and no annual insurance payments in Q3. Overall operational cash outflows decreased by 13% compared to Q2 FY23, with the aim of being operationally cash flow positive during H2 FY23.
The Company has identified a path to cash flow generation from operations and has executed a non-binding term sheet with the Stronach Group’s 1/ST Content business to distribute BetMakers’ Global Racing network’s (GRN) race meetings into international wagering markets, including the UK and Ireland.
Overall, Betmakers faces significant challenges due to the pandemic and changing economic conditions, but it is trying to optimise its business and focus on profitability and scale.
Alinda is a Business Reporter for The Sentiment
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