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Q&A With Chris Grove on Casino Operators and FansUnite

Roundtable Series: Chris Grove on Near Term Future of Online Sports Betting—FansUnite Entertainment (FANS)

While the global COVID-19 pandemic has put a hurting on the casino industry, the online sports betting subsector is on a virtual winning streak. Not only have COVID-19 restrictions significantly boosted online betting customer traffic, but the nascent sector was already surging due to a number of other catalysts. Key among these other catalysts are a 2018 U.S. Supreme Court decision that has now allowed states to legalize sports betting and the rise of “eSports” as a new component of online betting, and one that is proving especially popular with younger generations. 

To learn more about whether the online sports betting sector is capable of serving up any jackpots and to discover any companies worthy of going all in or at least taking a stake in, we talked to Chris Grove, a leading expert in U.S. sports betting and eSports. Chris is a partner at Eilers & Krejcik Gaming, where he leads the firm’s Sports & Emerging Verticals division.  Chris is also an investor in, and recently joined the board of directors of, FansUnite Entertainment Inc. (CSE: FANS)(OTC:FUNFF).

Q1:  Hi Chris. Thank you for sharing your wisdom with us. Can you tell us a little bit about yourself? In particular, what is the backstory of how you became a thought leader and investor in the gambling industry?

Show Answer

I started in the online poker industry back in the early 2000s as a player. My transition into the industry side was actually relatively organic. In the early chapters of online poker, it was relatively easy to identify opportunities and to get buy-in from relevant stakeholders to pursue those opportunities.

Over the course of the next decade, I was lucky enough to develop a reputation as someone who had an interesting mix of direct product experience, a deep knowledge of the practical landscape, and a good handle on the business side of online poker. That allowed me to start to blend in research and consulting work alongside my entrepreneurial projects.

As I went further down the consulting path, I worked to expand my field of vision beyond online poker into other products and markets. That decision coincided neatly with the beginnings of the legal online gambling market in the U.S., and from there I was fortunate enough to have the right partners at Eilers & Krejcik that helped me develop a public platform. I was also lucky enough to have a couple of exits that gave me the freedom to start to invest in interesting companies within the gambling space. 

Q2:  Can you give us a brief, high-level overview of your investment thesis in the gambling industry?

Show Answer

I like smaller companies that can solve problems for bigger companies, problems that bigger companies don’t have the time or talent to solve themselves.

Q3:  Can you share with us an “A-ha!” moment you had in your career that shifted the way you think about the industry?

Show Answer

High Stakes Poker. That show left an indelible impression on me. It really epitomized how entertaining gambling could be to a viewer, and how achieving that didn’t have to require much beyond capturing the essence of gambling in an authentic setting.

Q4:  The gambling industry has been around a very long time with brick and mortar casinos.  In the last couple of decades, we’ve seen the boom of online gambling and more recently, over the past few years, the advent of Bitcoin and blockchain based gambling.  

What do you see as the ‘stalwarts’ of the gambling industry—aspects of it that are unlikely to change any time soon?  And what do you see as areas most likely to be born or transformed in the coming years?

Show Answer

I don’t think Americans are going to abandon the physical casino anytime soon. But it’s important to remember that the contents of that physical box are always changing, even if the box itself appears somewhat static. So, we’ll continue to see incremental innovation on and around the retail casino floor.

I am a firm believer that one of the most likely transformations in the industry at large will be the continued blending and blurring of gaming and gambling. Video games–not just eSports, but video games more broadly—are an incredibly powerful cultural touchstone for Generation X and younger generations. The influence of video games is already apparent across broad sections of culture. That influence will start to accelerate dramatically within the casino industry over the decade to come. 

Q5:  What are your general thoughts on the opportunities in U.S. gambling?

Show Answer

Without a doubt, the greatest area for growth will be the online channel. And the primary driver of the online channel will be sports betting. But other products—most notably casino games and lottery—will also generate significant revenue from the online channel in the near term and will eventually eclipse sports betting in the long run.

Q6:  What is one product or service you envision that every casino operator wants but no one has yet figured out how to deliver effectively?

Show Answer

A slot machine that appeals to a significant number of customers under 40.

Q7:  Turning our attention now to FansUnite.  What about them initially caught your attention?

Show Answer

I’ve known CEO Scott Burton for the better part of the last decade. Scott was one of the first people thinking seriously about the opportunity at the intersection of eSports and gambling. I watched as he built his company slowly and steadily over time and was always impressed with his responsible use of capital and ability to persevere in a fickle industry. I think both of us have been waiting for the tipping point where the legacy gambling industry became serious about the eSports opportunity, and I believe—as does he—that we’re at that tipping point.

Q8:  Since acquiring Askott Entertainment, FansUnite now offers a large suite of both B2B and B2C products and services.  Can you comment on the opportunities and synergies of each (B2B/B2C)?

Show Answer

It’s no secret that B2C providers can operate more efficiently when they control their own tech stack, so the opportunity to marry those pieces is usually a good one. The B2C piece can then feedback valuable insights into the B2B side, so there’s a virtuous circle at work.

Q9:  What aspect of FansUnite business do you think is currently the most overlooked— by either the industry or investors—in terms of potential?

Show Answer

The video game-themed gambling games. FansUnite is building a suite of RNG-driven gambling games that have a legitimate chance of breaking through with an audience that typically hasn’t engaged with gambling games. Scott’s decade in the eSports industry paired with his background in the gambling industry means that FansUnite is uniquely positioned to deliver a new class of games that works both for players and for operators.

Q10:  What catalysts do you see going forward for the industry as a whole and for FansUnite in particular?

Show Answer

The U.S. market is obviously an opportunity not just for FANS, but for the broader sector of suppliers and operators. I think that the “niche at scale” approach that you see Fans taking with McBookie is another interesting area for growth. But the place where Fans can really stand apart is with their turnkey solution not just for eSports betting, but for eSports gambling.

Bonus Question:  What is your favorite game?

Show Answer

Probably still “Civilization,” but I can’t play it much anymore due to needing to stay employed and married.

Breaking Down the Excitement About the Online Sports Betting Sector

Some of Chris’ insights are particularly exciting. Let’s zoom-in on a few key aspects of his high level view to see how companies like FansUnite stand to book profits from the sector’s evolutionary growth.

Smaller Companies Uniquely Positioned Within Sector? 

Chris said he likes “smaller companies that can solve problems for bigger companies, problems that bigger companies don’t have the time or talent to solve themselves.” He gave some clues as to how he sees that unfolding. 

Chris noted that the most likely major transformation of the online gambling subsector “will be the continued blending and blurring of gaming and gambling,” while also suggesting that developing a slot machine that appeals to a significant number of customers under age 40 would be akin to finding the holy grail of the gambling industry. 

FansUnite is actively solving this problem in a very exciting way.  They are developing a suite of video-game themed slot machine style games. Imagine playing Grand Theft Auto as a casino game.  Actually, you don’t have to stretch your imagination too far. Check out a video demo here:

Or try your luck testing out their games in the dev-environment here:

https://demo.askottentertainment.com/games

These games add significant value to casino operators by offering interactive and engaging entertainment on their platforms.  Customers have more fun and stay engaged longer. This is just part of what Chris was addressing when he noted “FansUnite is uniquely positioned to deliver a new class of games that works for both players and for operators.”

Even more exciting is that just one of these games catching major traction could be a ‘Company-Maker’ in and of itself.  With FANS’ business model earning them a revenue-share on each of their games, just one game taking off could catapult them straight to the high-stakes room.

eSports Drives New Line of Profits for Online Sports Betting 

While Chris didn’t dig into the details on the intersection of eSports and gambling, it should be noted that eSports—organized, multiplayer video game competitions that are played between professional gamers—are already generating more than U.S.$1 billion per year in non-gambling-related elements of digital gaming, such as through sponsorship, advertising, ticket sales, game publisher fees, etc. eSports betting, on the other hand is expected to top U.S.$10 billion in wagers this year, with industry revenues coming in at about U.S.$700 million based on an industry average margin of 7%. We’ll add that we are in the early “Wild West” days of eSports, and its evolution as both a “sport” and betting market opens up a vast spectrum of potential revenue generation, whether from new eSports games, innovative betting options, or the creation of new interactive eSports platforms. 

FansUnite’s turnkey solution to add eSports betting and gambling to any existing gambling platform is an instant value-add for a platform operator by simply offering more options to their customers and thereby making a profit on every additional wager.  Again we see “FansUnite is uniquely positioned to deliver a new class of games that works for both players and for operators” by way of having eSports gamblers streaming their beloved event ON PLATFORM with a constant stream of engaging betting opportunities.  Not only does this give customers an opportunity to make more wagers on eSports, it keeps them on platform during match breaks where they might make other wagers. It also gives the winners of eSports wagers an opportunity to parlay those wins at other casino games.

Curious to see what this kind of engaging experience is like?  Check out their demos here:

https://demo.askottentertainment.com/streams

Along With Innovative Gaming/Gambling, Other Turnkey Solutions Key to Success

Chris’s thoughts regarding catalysts that will drive the industry going forward, as well as FansUnite’s success in general, was brief, but it highlights the provision of turnkey solutions as a driver of success. Any casino operator that doesn’t already have an integrated eSports betting platform is missing out on a potential revenue driver. 

We focus on eSports turnkey solution here as FANS is the only platform offering turnkey solutions in the eSports arena.  But it’s very important to note they also offer turnkey solutions for every other facet of a gaming platform.

Why is this important?  Because if an operator is lacking eSports and, say, sports betting, that operator has a one-stop shop with FansUnite to accommodate all of their needs.  This is how the company will successfully get their foot in the doors with more and more casino operators.

Providing Both B2B and B2C Products and Services Gives FansUnite an Edge   

Companies offering both B2B and B2C products and services have an edge.  Owning the tech stack for your own operational online casino, such as FansUnite’s McBookie, creates obvious savings in overhead costs, but also helps them improve offerings on the B2B side. Through the B2C side online casino, FansUnite can roll out new games, test them, and identify successes and potential pain points that allow them to deliver more effective products and solutions for their B2B clients.

One Last Key Take Away From the Q&A

The answer to question 7 provides what may be the biggest hint of Chris’s excitement about the sector and his involvement with FansUnite. He speaks of being impressed by CEO Scott Burton’s slow building of the company over time with the “responsible use of capital and ability to persevere in a fickle industry,” and closes the question by suggesting that hard work and patience are soon going to be rewarded. “I think both of us have been waiting for the tipping point . . . and I believe—as does he—that we’re at that tipping point.” 

Update September 9, 2020: FansUnite’s McBookie Gaming Revenue Up Over 400% YOY

Update September 2, 2020: FANS Launches U.S. Expansion with GameCo LLC


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