buy esports entertainment group, inc

Edward Engel, CFA, (646) [email protected]

Sales (800) 933-6830, Trading (800) 933-6820

COMPANY NOTE | EQUITY RESEARCH | November 02, 2021Internet, Media & Enabling Technologies

Esports Entertainment Group, Inc. | GMBL - $5.87 - NASDAQ | Buy

Initiation of Coverage

Stock Data

52-Week Low - High $3.95 - $24.48Shares Out. (mil) 21.99Mkt. Cap.(mil) $129.053-Mo. Avg. Vol. 444,61112-Mo.Price Target $22.00Cash (mil) $19.9Tot. Debt (mil) $35.0

Revenue ($ millions)

Yr Jun —2021— —2022E— —2023E—Curr Curr

1Q 0.2A 16.8E 31.2E2Q 2.4A 26.0E 30.8E3Q 5.4A 28.6E 32.5E4Q 8.8A 31.3E 35.0E

YEAR 16.8A 102.8E 129.4E

EBITDA


1Q (2.6)A (2.6)E 0.0E2Q (3.8)A (2.6)E 0.3E3Q (2.1)A (2.7)E (0.1)E4Q (5.5)A (1.7)E 1.4E

YEAR (14.0)A (9.5)E 1.6E

EPS $


1Q (0.15)A (0.47)E (0.19)E2Q (0.57)A (0.35)E (0.19)E3Q (0.73)A (0.28)E (0.18)E4Q (0.23)A (0.26)E (0.14)E

YEAR (1.68)A (1.34)E (0.70)E

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PriceVol (m)

GMBL One-Year Price and Volume History

GMBL: Reaching the UnreachableEsports Entertainment Group (EEG) is an emerging Omni-channel Gamingoperator with a focus on the rapidly growing Esports vertical. We initiatecoverage with a Buy rating and $22 target price, where GMBL offers exposureto two of the most attractive segments in Gaming, Online Gaming andEsports. We see EEG carving a sizable niche within the global Online Gamingindustry, where EEG's direct interaction with millions of Esports fans offers anunderappreciated customer acquisition opportunity.

$4bn Esportsbook TAM

Esports are a rapidly growing phenomenon, where ~500M Esports fans areactively watching and participating in video game competitions. This fan basehas already surpassed major sports leagues including the NFL and NBA. Overtime, we believe betting on Esports offers a similar global market opportunityas tennis, the NBA, or NFL, which each contribute ~5% of global sportsbookrevenues. This implies a $4bn addressable market for Esportsbooks by 2030.

Omni-channel Advantages

EEG operates an Esportsbook globally, with near-term plans to expandacross more regulated markets in the U.S. and Europe. The company alsooperates several non-gaming businesses across the U.S., which facilitateEsports tournaments and events for millions of fans. As Esports becomemainstream and Esportsbooks offer a larger addressable market, we seeGMBL cost effectively capturing meaningful market share by leveraging itsdirect interactions with Esports fans. We believe this unique advantage ishighly underappreciated, where Esports fans are difficult to reach for mostiGaming operators given non-traditional media preferences.

$135M EBITDA Potential

We believe GMBL's Omni-channel advantages can assert a 5% marketshare position within the Esportsbook industry. We also see a substantialopportunity to cross-sell Esportsbook users with traditional iGaming and sportsbetting products, similar to cross-sell rates acheived by traditional sportsbook/iGaming operators. EEG is also expanding into skill-based wagering, whichwe see offering a similar revenue opportunity as Esportsbooks. In aggregate,we believe EEG is capable of generating $650M in gross revenues by 2030,which we see translating to $135M of EBITDA on 25% margins.

Initiate with Buy rating, $22 TP

We initiate coverage on GMBL with a Buy rating and $22 PT. After closingeight acquisitions in the past 18 months, we expect GMBL's story to becomemore clear as EEG integrates these businesses. Alternatively, GMBL's 0.8x2022E revenue multiple trades at a steep discount to peers, where we don'tbelieve GMBL's valuation reflections any Esportsbook or skill-based wageringopportunities.

Important Disclosures & Regulation AC Certification(s) are located on page 30 to 33 of this report.Roth Capital Partners, LLC | 888 San Clemente Drive | Newport Beach CA 92660 | 949 720 5700 | Member FINRA/SIPC

TABLE OF CONTENTS

Market Opportunity – pg. 4

� Esports viewership is already comparable to major sports leagues.

� Esportsbooks and skill-based wagering platforms offer Esports betting opportunities.

� We forecast a $4bn addressable market by 2030.

Fitting Everything Together – pg. 8

� EEG’s Omni-channel presence creates market share advantages.

� We see traditional Online Gaming operators struggling to target Esports fans.

� We see a $650M gross revenue opportunity for EEG by 2030.

Esports Opportunity Not Priced In – pg. 13

� We apply a 11x multiple to our 2030 EBITDA forecast to reach a $22 target price.

� GMBL currently trades at a wide discount to U.S. iGaming peers.

EEG Games – pg. 16

� EGG offers skill-based wagering and non-wagering Esports services.

� Helix, ggCircuit and EGL connect EEG to millions of Esports fans.

� LANDuel helps monetize Helix, ggCircuit and EGL.

EEG iGaming – pg. 20

� The EEG iGaming segment includes Esportsbook, as well as traditional sportsbook and iGaming.

� We see EEG iGaming generating GGR of ~$400M by 2030.

Forecasts – pg. 24

� EEG is guiding FY2022 revenue of $100-105M.

� We model ~25% revenue growth in FY2023-24.

� We see EEG reporting positive EBITDA in CY4Q22 (F2Q23).

Capital Structure – pg. 26

� EEG has ample financial flexibility to continue investing in growth.

� We see profits inflecting into positive territory by YE2022.

Management – pg. 27

� EEG’s management team is led by industry veterans from both iGaming and Esports industries.

Valuation & Risks – pg. 28

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ESPORTS ENTERTAINMENT GROUP, INC. Company Note - November 2, 2021

Company Overview

Esports Entertainment Group (EEG) is an early entrant in the nascent Esports betting industry, where the

company offers skill-based wagering solutions, Esportsbook products and traditional iGaming and online

sports betting. In 2018, EEG launched www.Vie.gg, an “Esportsbook” website. EEG has also expanded

through a series of acquisitions, including Argyll Entertainment (July 2020), FLIP Sports (September 2020),

Esports Gaming League (January 2021), Lucky Dino (March 2021), Holodeck Ventures (May 2021), Helix

Holdings (June 2021), ggCircuit (June 2021), and BetHard (July 2021).

EEG’s operations serve global markets, covering 180+ jurisdictions with a focus on North America, Europe

and South America. In Europe, EEG is licensed in five Tier-1 markets, including Malta, U.K., Ireland,

Sweden and Spain. EEG is also expanding in the U.S., with Esports operations across several states and a

pending Online Sports Betting (OSB) license in New Jersey.

Figure 1: Esports Entertainment Group Segments (FY2022)

Source: SEC filings, ROTH Capital Partners

EEG went public through a reverse merger and subsequently up-listed on Nasdaq in March 2020. After

completing eight acquisitions since July 2020, EEG is targeting ~$100-105M revenues for FY2022. EEG

operates two segments, EEG Games (EGG) and EEG iGaming (EGI). EEG’s iGaming segments offer

Esportsbooks, OSB and iGaming products globally. EGG facilitates Esports tournaments and skills-based

wagering across directly-managed and third-party venues.

Helix ggCircuit EGL vie.bet Lucky Dino SportNation BetHard

Managed

Venues

Third-party

Venue Services

Online Event

Management

Online

EsportsbookiGaming

OSB & iGaming

(Argyll)

OSB &

iGaming

EEG Games (~15% of revenue)

LANDuel

Skill-based Wagering

EEG iGaming (~85% of revenue)

Esports Entertainment Group

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Market Opportunity

� Esports viewership is already comparable to major sports leagues.

� Esportsbooks and skill-based wagering platforms offer Esports betting opportunities.

� We forecast a $4bn addressable market by 2030.

What are Esports?

Esports is the competitive playing of video games, either in-person, at large stadium-style venues, or

remotely broadcasted across streaming platforms. Similar to other sports leagues, Esports leagues include

competitive tournaments between amateur gamers and professionals. Esports players and leagues

typically specialize in certain games, with the most popular being League of Legends, Counter Strike and

Dota 2.

How big is Esports?

Esports are a global phenomenon, where a global fan base has pushed Esports viewership above many

major professional sports leagues. With nearly 500M global viewers, Esports have a larger fan base than

many high-profile professional leagues in the U.S. In fact, ~100M viewers watched the largest League of

Legends tournament last year, a figure comparable to the NFL’s Super Bowl.

Figure 2: Global Sports Viewership in 2021 (M)

Source: Forbes, NewZoo, Nielsen, FIFA, Activate Analysis

The popularity of Esports has translated into a highly lucrative industry. Last year’s largest Dota 2

tournament included a $40M prize pool, dwarfing the PGA’s $12M prize for the Masters Tournament.

Esports have also attracted globally recognized advertising sponsors, where many of the top Esports teams

earn upwards of $5-10M annually through tournament prizes and endorsements.

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Figure 3: Esports Non-Gaming Revenue ($M)

Source: NewZoo

Esports Betting

Many global sportsbook operators offer betting lines on major Esports events; although, overall Esports

wagering remains in its infancy. For most sportsbook operators, Esportsbooks are merely an ancillary

service, where global sportsbooks remain focused on traditional sports betting and generate minimal

revenues from Esports. Yet Esports betting is also gaining popularity. In the U.K., surveys indicate 9% of

adults bet on Esports versus ~20% for adults between the ages of 18-34, while in the U.S., over 50% of

Esports fans indicated interest in Esports betting if available (Interpret).

Figure 4: Adults Betting on Esports in the U.K.

Source: U.K. Gambling Commission

Entain, a leading global iGaming operator, estimates wagering on Esports was ~$3bn in 2020 and expects

this to grow to $12bn by 2025. Esports betting is split into two categories:

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� Skill-based wagering consist of peer-to-peer wagers, where gamers participate in tournaments with

prize pools and even bet against one another. Popular skill-based platforms include Skillz (SKLZ –

NC), which hosts Esports competitions that allows gamers to wager on their own performance. Similar

to poker rooms, P2P platforms charge a “rake”, by taking a 10-20% cut of winning wagers.

� Esportsbooks are more comparable to traditional sportsbooks, where Esports fans can wager on the

outcomes of competitions between their favorite Esports teams. Esportsbooks will offer betting lines on

the outcomes of these games, as well as prop-bets within matches.

Figure 5: Global Esports Wagering ($bn)

Source: Entain August 2021 Investor Day

Esports Betting Eco-system

An evolving Esports eco-system is also supporting an environment for exponential wagering growth. Twitch

has already achieved mainstream popularity, after Amazon acquired the online streaming platform for

$970m in 2014. Twitch enables ~40M users to watch, follow and chat with other amateur and professionals

gamers. Skillz is another Esports platform that’s becoming mainstream, after the peer-to-peer skills-based

tournament platform went public in 2020 through a SPAC deal that valued the company at $3.5bn.

Global sportsbook operators have also shifted focus towards Esports, where a flurry of recent M&A

highlights meaningful interest in this vertical. In August 2021, Entain acquired UNIKRN for ~$70M, where

UNIKRN operates a platforms for both skills-based wagering and Esportsbooks. Kambi, the largest B2B

sportsbook technology provider, recently acquired Abios in a transaction valued at ~$31m, where Abios

offers Esports betting data and odds.

With Esports becoming mainstream and global gaming operators shifting focus towards this vertical, we

expect the eco-system for Esports to continue evolving. Major regulatory bodies such as the Nevada

Gaming Commission already recognize Esports as a legitimate vertical and are looking for ways to better

regulate Esports betting. Meanwhile, several organizations and technology providers have made progress

towards ensuring Esports integrity while better identifying match-fixing. We see these efforts fostering an

Esports wagering industry with revenues comparable to other major professional sports.

Esportsbook Total Addressable Market

Esports contributes less than 1% of global sportsbook revenues, despite maintaining one of the largest fan

bases globally. While ~50% of Esports fans are teens, and thus unable to gamble, we still see adult Esports

viewership exceeding the NFL and NBA by 2024, as Esports fans mature and popularity continues to grow.

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Esports fans also appear to have similar devotion as other sports fans, where over 50% of Esports fans

watch competitive Esports more than once per month.

Figure 6: Global Esports Audience (M)

Source: Newzoo

At maturity, we believe Esports wagering will offer a similar addressable market as wagering on the NFL,

NBA or tennis. The NFL and NBA each contribute ~35% of U.S. wagers, although just ~4% of global

wagers given a lower international fan base and a developing U.S. market. Alternatively, tennis contributes

~5% of sportsbook wagering in more mature European markets such as the U.K.

Assuming Esports can contribute ~5% of global online sportsbook revenues, we model $4bn in

Esportsbook gross gaming revenues (GGR) by 2030. Similar to traditional sports, we see Esports wagers

ramping alongside market growth in the U.S. and LatAm, while opportunities such as in-play wagering are

equally as relevant, where in-game statistics and wagering opportunities are updated in real-time.

Figure 7: Global Sportsbook GGR Forecasts ($bn)

Source: Kambi August 2021 investor presentation, NewZoo, ROTH Capital Partners forecasts

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Fitting Everything Together

� EEG’s Omni-channel presence creates market share advantages.

� We see traditional Online Gaming operators struggling to target Esports fans.

� We see a $650M gross revenue opportunity for EEG by 2030.

Segment Interrelation

EEG is an Esports focused gaming operator, with both Esportsbook and skill-based wagering capabilities.

While we expect gaming to be the core earnings driver longer-term, EEG also offers technology and

support services to third parties hosting Esports events and leagues. These ancillary, non-gaming services

are just as important to EEG’s long-term opportunity, as they can help target and acquire gaming

customers.

As investors piece together EEG’s operating segments, the interrelation of these businesses is what

differentiates the company within the industry. As Esports continue to gain popularity and global

sportsbooks shift focus to Esports wagering, we expect industry leaders such as Flutter, Entain and

DraftKings (DKNG – Sell) to launch Esports products as well. However, we also see these operators

struggling to target Esports fans, while EEG’s direct interaction with millions of Esports fans will be difficult

to replicate.

A Unique Player Base

Video Gamers and Esports fans have little symmetry with traditional sportsbook and iGaming customers.

On average, Esports fans are typically Millennials or Gen Z, where 62% are younger than 34. The average

age of an Esports fan is ~29, versus ~38 for sportsbook users and ~43 for iGaming. Similar to Millennial

and Gen Z peers, Esports fans are more likely to “cut the cord”, consuming content through non-traditional

platforms rather than TV. Gen Z is also less interested in traditional sports, where 61% prefer Esports over

other sports.

Figure 8: Average User Age in the U.S. (2020)

Source: Newzoo, RSI 2Q21 Investor Presentation

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Figure 9: Esports Audience by Age (2020)

Source: Global Web Index

While Esports fans skew younger, this base is still generally affluent, where 43% have incomes above

$75,000 (despite just 50% being adults). Adult video gamers are also 4.3x more likely to participate in

wagering (sports, Esports, racing, etc) and 4.5x more likely to participate in iGaming. In fact, not only do we

see a significant opportunity to offer Esports waging to Esports fans, but we see an equally significant

opportunity to cross-sell traditional sportsbook and iGaming products to this user base.

While this unique and targeted group offers meaningful value, this demographic has also been difficult to

reach for traditional advertisers. Despite consuming 1.5x to 2x more media than non-Esports fans, adult

video gamers are less likely to consume traditional media, making them difficult to reach for advertisers.

This dilemma has fostered a large and growing sub-industry of Esports advertising affiliates. Global brands

have formed partnerships with leading Esports athletes, teams and leagues to better target Esports fans.

Figure 10: Adult Video Gamer Participation vs Non-Gamers

Source: Entain 2Q21 investor presentation

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These affiliate advertising agreements are costly, particularly for sportsbook and iGaming operators that

offer affiliates as much as a 25-35% share of revenues. As global sportsbook operators shift focus to

Esports, we expect even more competition for affiliate marketing partnerships, particularly given the

immense marketing budgets of companies such as Flutter and Entain. We fear this could reduce ROIs on

affiliate marketing partnerships even further, while potentially crowding out smaller operators such as EEG.

As such, we see a need for Esportsbook operators to find unique and cost effective customer acquisition

strategies.

Figure 11: Esports Revenues by Segment in 2020 ($M)

Source: Newzoo

EEG’s Unique Advantage

EEG’s non-gaming segments offer a platform to interact and target Esports fans. With access to millions of

Esports fans each year, we believe EEG’s non-gaming segments offer a cost efficient and highly targeted

platform for cross-selling gaming products to Esports fans. This gives EEG a unique edge in reducing

customer acquisition costs and capturing market share in a highly competitive industry.

� Helix: EEG hosts Esports events and tournaments at “Helix eSports Entertainment Centers”, where as

many as 10,000 Esports fans visit these stadium-style venues each month. In addition to the two active

Helix centers, EEG is in the process of launching three additional centers and plans to launch several

new locations each year. Longer-term, we see potential for these Helix centers to occupy dozens of

major cities across the U.S., Europe and Latin America.

� ggCirciut: EEG offers software and support services to third-party locations hosting their own Esports

tournaments and events. Third-party locations include sports stadiums, casinos, movie theatres and

“LAN Centers” or cyber-cafes. EEG’s ggCircuit operates across nearly 1,000 venues that host nearly

2M unique gamers. This highly scalable business supports Esports events across both large and small

venues, with ggCircuit’s user base growing ~40% YoY even alongside the pandemic.

� Esports Gaming Leagues: EEG also offers technology and support services for third parties looking

to launch both online and physical Esports events. By partnering with organizations looking to engage

a fan base that’s difficult to reach, EEG can leverage its partners’ marketing reach as well a physical

locations for hosting events. Current partnerships include 15 professional sports franchises, as well the

National Indian Gaming Association. EGL’s tournaments include over 350k registered users and

should continue to grow as new partneships are added.

� More segment details on page 17.

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Figure 12: Helix Esports Gaming Center

Source: helixesports.com

$650M Revenue Opportunity Longer-term

EEG’s direct interaction with millions of Esports fans creates a unique advantage for asserting a sizable

niche within the gaming industry. Given the retail footprint and partnerships required to reach EEG’s scale,

we don’t believe this Omni-channel presence is easily replicable. We also expect global online operators to

struggle with targeting Esports fans, despite their immense marketing budgets.

We see EEG’s Omni-channel presence helping the company assert a 5% market share position within the

global Esportsbook industry longer-term. This implies a $200M GGR opportunity alongside our $4bn

industry Esportbook forecast. We also see a similar revenue opportunity from cross-selling iGaming and

traditional sports betting products to Esportsbook users. This is similar to traditional online gaming

operators, where there’s typically an even split between sportsbook and iGaming revenues.

Within the EEG Games segment, we model $250M revenues by 2030, which includes both skill-based

wagering (peer-to-peer) and non-gaming services. While the addressable market for P2P wagering is

difficult to quantify, given the informal nature of wagers, we believe the long-term market opportunity is at

least 2x that of Esportsbook. Within our $250M forecasts, we model ~$200M from skill-based wagering and

~$50M from other non-gaming services offered by Helix, ggCircuit and EGL.

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Figure 13: EEG 2030E Gross Revenue Forecast ($M)

Source: ROTH Capital Partners Forecasts

25% EBITDA Margin Profile

By 2030, see EEG approaching a longer-term margin profile of ~25%. This margin profile is at the low end

of Online Gaming peers with 25-30% margins. While EEG plans to internally develop its own technology,

thus reducing fees to third-party providers, we still expect high market access fees in the U.S. (~5-10% of

GGR) in addition to costs associated with EEG’s land-based footprint. While we model 25-30% margins for

EEG’s iGaming segment, we model 20-25% for EEG’s Games segment.

When factoring a ~78% net gaming revenue margin, our 25% EBITDA margin assumption implies a 2030

EBITDA opportunity of $135M.

M&A Core to Strategy

EEG has completed eight acquisitions over the past 18 months, for a combined transaction value of $110M.

While we expect the company to take a breather in FY22, we view M&A as a core driver to EEG’s strategy.

Over time, we see EEG continuing to integrating businesses that expand its reach among Esports fans. We

also expect EEG to continue developing its technology stack through acquiring iGaming and Esports

content and technology provides.

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Esports Opportunity Not Priced In

� We apply a 11x multiple to our 2030 EBITDA forecast to reach a $22 target price.

� GMBL currently trades at a wide discount to U.S. iGaming peers.

� We see M&A supporting GMBL after EEG starts generating meaningful Esportsbook revenues.

Target Valuation

To value GMBL, we take a longer-term view towards when growth begins to normalize and margins ramp.

By 2030, we believe industry GGR will begin to normalize and see EEG’s margins expanding to ~25%

which implies EBITDA of ~$135M in 2030. We apply an 11x multiple to our terminal EBITDA forecast while

discounting that value by 15% annually to reach our $22 PT.

Our 11x target multiple is based on current multiples for International Online Gaming operators, whose

growth profiles have started to mature outside the U.S. Our 15% discount rate is at the high end of global

Online Gaming peers.

Figure 14: Int’l B2C Online Gaming EV / FY2 EBITDA

Source: Eikon

Our $22 PT implies a 4.6x multiple on our CY2022 revenue forecast. EEG currently trades at a wide

discount to U.S. peers, and in-line with European operators with minimal U.S. exposure. We believe this

discount is due to the complexity of EEG’s story alongside the integration of several acquisitions in 2021.

With ~85% of Pro Forma revenues from European iGaming, we believe investors are valuing EEG as a

mature iGaming operator without giving credit for U.S. or Esports expansion opportunities.

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Figure 15: U.S. B2C Online Gaming EV / FY2 Sales

Note: GNOG targeted for acquisition. WBET FY2 sales based on mgmt. guidance. Applies 7x EBITDA multiple to

PENN’s land-based ops to reach implied iGaming valuation

Source: Eikon, WBET May ’21 Investor Presentation

M&A Heating Up

We see M&A offering a premium to EEG’s valuation, particularly given EEG’s unique opportunity to target

Esports fans. Entain recently acquired UNIKRN for ~$70M. While UNIKRN’s Esports wagering capabilities

are similar to EEG’s, UNIKRN generates negligible revenues and does not have European iGaming

operations or a U.S. footprint. As such, we believe the $70M valuation applied to UNIKRN should be

viewed as incremental to GMBL’s current $100M enterprise value which does not reflect EEG’s Esports

opportunities.

Meanwhile, U.S. Online Gaming transaction multiples have recently trended around 10x since 2019. As

EEG begins generating Esportsbook and traditional sportsbook revenues, we see investors applying a

higher multiple to EEG’s U.S. segments. Potential acquirers include global online gaming operators that

have yet to develop an Esports strategy but are likely to shift focus after Entain’s and Kambi’s recent

acquisitions in the sector.

Figure 16: U.S. Online Gaming Transactions

Source: SEC filings, Eikon

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Interactive*

WBET GNOG RSI GMBL

Date Acquirer Target Transaction TEV ($M)

TEV / FY2

Sales FY2 Sales

Jul-18 MGM-Entain BetMGM 50:50 JV

Dec-19 Diamond Eagle Acquistion Corp DraftKings & SBTech SPAC 2,730 3.9x 700

Jan-20 Penn National Barstool Sports 36% stake 453 4.5x 100

Jun-20 Landcadia Holdings II Golden Nugget Online SPAC 745 6.1x 122

Jul-20 dMY Technology Group Rush St. Interactive SPAC 1,725 5.4x 320

Sep-20 Caesars William Hill Takeout 3,700 2.2x 1,682

Dec-20 Flutter Fanduel 37% stake 11,223

May-21 Austerlitz Acquisition Corp Wynn Interactive SPAC 3,161 7.5x 422

Aug-21 Penn National Score Media & Gaming Takeout 2,000 17.7x 113

Aug-21 DraftKings Golden Nugget Online Takeout 1,560 7.5x 207

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Figure 17: GMBL Valuation

Source: Eikon, ROTH Capital Partners forecasts

US$M EOSB iGaming EGG Total

Industry TAM 4,000 170,000 8,000 174,000

GMBL market share 5.0% 0.1% 3.1% 0.4%

GGR Opportunity 200 200 250 650

2030E EBITDA 38 41 56 135

target multiple 11.0x

Present Value per Share $22

upside 383.0%

US$ millions (CY) 2021E 2022E 2023E 2024E

Revenue 57 122 145 173

Target Multiple 9.8x 4.6x 3.9x 3.2x

Enterprise Value 558 558 558 558

Treasury Method 61 61 61 61

Net cash 6 6 6 6

Equity Value 625 625 625 625

shares 27.8 27.8 27.8 27.8

Target Price $22.48 $22.48 $22.48 $22.48

upside 283.0% 283.0% 283.0% 283.0%

Share Price $5.87 $5.87 $5.87 $5.87

Trading Multiple 1.7x 0.8x 0.7x 0.6x

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Figure 18: Global Gaming Comps ($M)

Note: GNOG targeted for acquisition. WBET and DDMX FY2 sales based on mgmt. guidance

Source: Eikon

Company Ticker Price

ROTH

Rating

Price

Target

Upside /

Downside

Market Cap

(US$)

Enterprise

Value (US$)

EV / CY1

EBITDA

EV / CY2

EBITDA

EV / CY1

Sales

EV / CY2

Sales

N. America B2C iGaming

DraftKings DKNG $49.02 Sell $41 -16.4% 21,029 19,630 - - 15.3x 10.9x

eSports Ent. Group GMBL $5.87 Buy $22 274.8% 129 116 - - 2.1x 1.1x

Golden Nugget Online Gaming GNOG $17.75 1,489 1,476 - - 10.7x 7.1x

Rush Street Interactive RSI $20.93 Buy $24 14.7% 4,587 4,227 - - 8.7x 7.0x

Wynn Interactive AUS $10.00 3,801 3,161 32.9x 7.5x

N. America Average 13.9x 6.7x

Int'l B2C iGaming

Betsson AB BETS.ST SEK 59.80 960 967 5.2x 5.9x 1.2x 1.2x

Codere Online DDMX $10.00 497 353 - - 3.3x 2.3x

888 Holdings 888.L 381.4p 1,939 1,676 10.3x 10.1x 1.7x 1.7x

Entain ENT.L 2,062p 16,668 19,357 16.0x 13.2x 3.7x 3.2x

Flutter Ent. FLTRF.L 14,035p 33,624 37,162 25.0x 20.9x 4.4x 4.0x

Kindrid Group KIND.ST SEK 118.15 3,155 2,823 6.3x 8.6x 1.6x 1.6x

LeoVegas AB LEOV.ST SEK 31.98 309 329 6.3x 5.1x 0.7x 0.6x

Pointsbet Holdings PBH.AX A$8.10 1,539 1,054 - - 5.3x 3.1x

Super Group SEAH $11.20 5,430 5,225 14.9x 12.4x 3.3x 2.9x

Int'l Average 12.0x 10.9x 2.8x 2.3x

Omni-channel Gaming

Penn National PENN $74.89 Buy $107 42.9% 12,665 17,081 8.5x 8.5x 2.9x 2.8x

MGM Resorts MGM $48.47 23,357 30,481 14.9x 9.8x 3.4x 2.4x

Caesars Ent. CZR $112.06 23,917 49,068 14.8x 13.0x 5.1x 4.4x

Churchill Downs CHDN $240.70 9,207 10,860 17.4x 14.3x 6.8x 5.9x

Wynn Resorts WYNN $93.69 10,837 19,955 32.6x 15.3x 5.4x 3.7x

Bally's Corp. BALY $47.36 2,575 3,713 8.1x 5.8x 2.3x 1.4x

Omni-channel Average 16.0x 11.1x 4.3x 3.4x

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EEG Games

� EGG offers skill-based wagering and non-wagering Esports services.

� Helix, ggCircuit and EGL connect EEG to millions of Esports fans.

� LANDuel helps monetize Helix, ggCircuit and EGL.

Segment Overview

The EEG Games includes businesses related to hosting and managing Esports tournaments and events,

either at EEG’s Helix locations, third-party venues or remotely. In addition to EEG’s Esports services, this

segment also includes skill-based wagering, where EEG provides technology to facilitate P2P wagering

across its platforms while collecting a ~10% “rake” as a fee.

Figure 19: EEG Games Segment (FY2022)

Source: ROTH Capital Partners

Helix Esports Centers

EEG acquired Helix for $15M in June 2021. Helix operates eSports Entertainment Centers, where these

stadium-style venues each maintain dozens PCs and high-tech equipment needed for hosting Esports

tournaments and events. Once fully ramped, these venues host ~10,000 visitors per month while

generating revenue of $1-2m annually with potential for ~20% EBITDA margins.

EEG’s active Helix centers are located in Foxborough, MA and North Bergen, NJ. Within the next few

quarters, the company expects to launch new centers in Freehold, NJ, Los Angeles, CA and Canton, OH.

Longer-term, we see an opportunity to operate Helix Centers across several major cities in the U.S., with

further growth in Europe and Latin America. These high-traffic venues are particularly attractive to

professional sports teams and casinos, which are partnering with EEG to expand Helix’s network. By

YE2025 we model ~20 centers globally generating annualized revenue of ~$35M with ~$7M EBITDA.

While the COVID-19 pandemic has impacted Helix visitation, traffic has started to rebound since social

distancing mandates were removed. Visitation among casual gamers has already rebounded, but high-

profile Esports leagues have been more cautious with restarting events. While it’s difficult to expect these

events to resume this winter, we see operations mostly normalizing in spring 2022 and beyond.

Figure 20: Helix eSports Entertainment Centers

Source: helixesports.com

Helix ggCircuit EGL

Managed

Venues

Third-party

Venue Services

Online Event

Services

EEG Games (~15% of revenue)

LANDuel

Skill-based Wagering

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ggCircuit

EEG acquired ggCircuit (includes LANDuel) for $25M in June 2021. ggCircuit helps third-party venues host

Esports events by supplying software and support services. ggCircuit software offers a platform for

managing Esports tournaments, leagues and player accounts. The cloud-based solution is 100% SaaS-

based, easy to implement and is highly scalable. The business also offers consulting services that advise

building and running Esports events at locations across the world. For FY2022, we model $12M revenues

from this business.

ggCircuit’s core client base is “LAN Centers”, or cyber-cafes; however, ggCircuit has expanded into other

venues such as movie theatres and casinos seeking to drive traffic to their destinations. The ggCircuit

network currently covers nearly 1,000 venues globally with nearly 2M registered Esports users. This SaaS-

based business charges a fee per connected PC, where PCs within the network grew 27% YoY in October

despite COVID headwinds. While the business is currently operating near breakeven as it scales, this

SaaS-model should support ~25% EBITDA margins longer-term.

ggCircuit has also recently rolled out cryptocurrency mining applications for third-party LAN centers.

ggFuze offers LAN centers the ability to use idle computing power to passively mine the Ethereum

cryptocurrency. The software based service can be implemented with the “touch of a button”, and can also

determine which LAN centers have enough idle computing capacity to mine crypto. Since its beta launch in

May 2021, over 300 LAN centers opted into the service while mining over $1M of Ethereum.

Figure 21: ggCircuit Network

Source: industry.ggcircuit.com

Esports Gaming League (EGL)

In addition to software and support services for physical Esports venues, EEG also organizes and manages

online Esports events. EEG acquired EGL for $3M in January 2021, where the B2B business provides full

turnkey services for third parties looking to create Esports events. EGL’s tournament platform supports

game launches, bracketing, ticketing, while also assisting with broadcast production. These remote events

have attracted over 350k gamers competing on a regional and national basis, where EGL generates

revenue from user entry fees and ancillary services.

12.0 12.4 12.3

11.6 11.3 11.2

11.9 11.9

12.8

13.6 14.2

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M000sPCs (L) Unique Users (R)

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EGL forms partnerships with entities looking to engage a growing fan base that’s traditionally difficult to

reach. Partnerships include several professional sports teams, including seven NFL teams. EEG has also

partnered with the National Indian Gaming Association as its official Esports technology provider. These

partnerships help EGL leverage its partners’ reach, while also hosting certain EGL events at its partners’

venues. Prior to forming these partnerships in 2019, EGL generated $1.3M in revenue but we expect rapid

growth since. After forming partnerships with 15 professional sports teams, EGL is currently in discussions

with 20 more.

Figure 22: EGL Partnerships

Source: GMBL press releases

LANDuel

While Helix, ggCircuit and EGL each connect EEG to millions of Esports fans, we view LANDuel as EEG’s

profit driver within the EEG Games segment. LANDuel is capable of facilitating skill-based wagering across

EEG’s network of Esports events, with wagering conducted in Helix Centers, third-party venues and online.

The LANDuel product manages and facilitates both prize money and player-to-player wagering within

Esports events managed by EEG, where LANDuel collects a “rake”, or ~10% cut of winning wagers.

The LANDuel product is currently undergoing regulatory approval in the U.S., but EEG expects to receive

approval this fall. The product will initially be rolled out at a third-party venue in Atlantic City. After

conducting several tournaments and implementing LANDuel across EEG’s Helix Centers, the product

should be ready for wider distribution, potentially as early as 2023. Given LANDuel’s opportunity to drive

visitation, many casino and tribal gaming operators have already indicated interest.

Because P2P wagering is viewed as a game of skill, rather than game of chance, it is permitted in states

without sports betting regulation. 44 states currently allow skill-based wagering, which creates an

opportunity to implement LANDuel across hundreds of third-party venues operated through ggCircuit.

Because LANDuel is software based, it can quickly be implemented within the highly scalable ggCircuit

software. Longer-term, the product will be available for download remotely through ggCircuit AtHome

software.

Given the product remains nascent, we omit LANDuel’s revenue impact from our medium-term forecasts

until the product roll-out becomes more tangible. With FY2022 to be a transition year, we wouldn’t expect

LANDuel to impact EEGs P&L until 2023. However, longer-term, we believe LANDuel offers a similar

opportunity as EEG’s Esportsbook product, given the larger TAM for P2P gaming.

League NFL NBA NHL MLS Other

Number 7 1 2 5 4

Partners Baltimore Ravens Cleveland Cavaliers LA Kings Arsenal (EPL) Riot Games

Denver Broncos NY Rangers LA Football Club Indian Gaming Esports Authority

Indianapolis Colts LA Galaxy Hall of Fame Village

LA Chargers New England Revolution Pro Football Retired Players Association

New England Patriots Philadelphia Union

Philadelphia Eagles

Tampa Bay Buccaneers

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EEG iGaming

� The EEG iGaming segment includes Esportsbook, as well as traditional sportsbook and iGaming.

� We see EEG iGaming generating GGR of ~$400M by 2030.

� EEG’s Omni-channel presence creates customer acquistion advantages.

Segment Overview

The EEG iGaming segment includes EEG’s proprietary Vie.bet Esportsbook product, in addition to recently

acquired traditional online gaming operations (SportNation, Lucky Dino and BetHard). In Europe, EEG is

licensed in five Tier-1 markets, including Malta, U.K., Ireland, Sweden and Spain. EEG’s products are

offered across 180+ jurisdictions, largely supported by its Malta license. EEG is also expanding in North

America, with a pending Online Sports Betting (OSB) license in New Jersey and plans to launch in

additional jurisdictions in the U.S. and Canada in 2022.

Figure 23: EEG iGaming Segment (FY2022)


Vie.bet

www.Vie.bet is EEG’s proprietary Esportsbook, where the platform was completed in 2018 and has only

started to launch across regulated markets. Vie.bet is a sportsbook tailored towards Esports betting, while

offering streaming and wagering capabilities on hundreds of matches each day. On the platform, Esports

fans can bet on their favorite Esports teams while simultaneously watching live events.

Unlike many iGaming peers that outsource technology to third parties, EEG’s Vie.bet product is internally

developed. While Vie.bet does outsource risk and trading (odds making) functions to a third-party supplier

(Oddin), EEG internally manages all other functions including bet processing, player account management

and compliance. Online operators with internally developed tech-stacks have historically been faster to

market, particularly in the U.S. where regulations vary state-by-state.

Figure 24: Vie.bet Technology Stack


Esportsbook contributes less than 5% of EEG’s run-rate revenues, but we see rapid growth in FY2022 and

FY2023 alongside expansion across new markets. Vie.bet is currently only available in grey-markets

through EEG’s Malta license (particularly Latin America), but we expect several white-market launches by

YE2021 and 2022. EEG already operates traditional OSB and iGaming products across several regulated

markets including Sweden, U.K., Ireland and Spain.

vie.bet Lucky Dino SportNation BetHard

Online

EsportsbookiGaming

OSB & iGaming

(Argyll)

OSB &

iGaming

EEG iGaming (~85% of revenue)

Layer: Content → Platform → Front-end → User

Function: Data, statistics, oddsRisk, compliance, bet processing,

player account mgmt

User experience, branding,

customer service, promotions

Operator: Oddin Vie.bet Vie.bet

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U.S. Expansion

In North America, EEG has a pending sports betting license in New Jersey which we expect to be approved

within the next few weeks. Given Vie.bet’s unique characteristics, NJ licensing has taken longer than

expected (8+ months) as regulators become more comfortable with this emerging segment. However, given

the state’s pioneering involvement in U.S. sports betting expansion, many state regulators have modeled

their own licensing procedures after NJ. Upon attaining an NJ license, we expect a more expedited

licensing timeline for future states.

Beyond NJ, EEG will initially target jurisdictions that don’t require market access agreements with third

parties. In many U.S. states, land-based casinos are granted a number of “skins” which can be offered to

online operators for access fees as high as 5-10% of GGR. Markets without “skins” include Ontario, which

EEG expects to launch in 2022. Other U.S. territories without “skins” include Tennessee, Maryland, and

Virginia. While we see EEG expanding into other markets over time, barriers to entry are lower for non-skin

markets.

Figure 25: State-by-State Online Gaming Regulations

Note: GGR indicates gross gaming revenue vs net gaming revenue for NGR

Source: State gaming commissions

In addition to launching Esportsbook products in the U.S., EEG will also roll out traditional sports betting

and iGaming. Soon after Vie.bet launches in NJ, EEG will implement sports betting functionality. Given

Vie.bet’s vertical tech integration, sportsbook functionality will largely be developed in-house while

outsourcing sophisticated risk and trading functions from Genius Sports. While iGaming is a longer-term

opportunity, EEG would need to attain a separate license in the state.

Europe Expansion

In Europe, EEG expects to launch Vie.bet in Sweden by YE2021. Sweden already has a large base of

Esports fans, and we also see an opportunity to cross-sell EEG’s curent iGaming customers in the country.

Beyond Sweden, we expect Esportsbook launches in Finland, the U.K., Ireland and Spain between 2022-

2023. EEG already operates fully-licensed sportsbook and iGaming products in these countries and we see

an opportunity to integrate technology stacks across recent acquisitions.

� Lucky Dino operates several online casino brands across Europe with over 25K monthly users and a

focus on Scandinavia markets. The $30M acquistion closed in March 2021, where Lucky Dino

generated $21.5M revenue in FY2020 versus $4M EBITDA. Lucky Dino operates a proprietary

iGaming platform, where the company internally manages affiliate marketing software, payment

servers and a highly sophisticated CRM system that includes loyalty and player account management

functions.

In addition to European market access, the acquisition offers an opportunity to cross-sell EEG’s

Esportsbook and traditional sportsbook products to Lucky Dino’s user base. Lucky Dino’s proprietary

tech stack also offers a vertically integrated tech platform to utilize across the rest of EEG’s European

operations, in addition to future U.S. expansion.

� SportNation is a sportsbook-focused online gaming brand with 100,000+ users. The gaming platform

was acquired alongside the $8M Argyll acquistion in July 2020, with Argyll generating revenues of

$12M in 2019. While EEG’s Malta license offers a global reach, SportNation is mostly focused in the

U.K. and Ireland. The OSB platform relies on third-party back-end technology functions but EEG will

eventually transition SportNation’s tech platform to in-house.

AZ CO CT D.C. IA IL IN LA MD MI NH NJ NV OR PA RI TN VA WV WY

OSB Tax % 10% 10.0% 13.8% 10.0% 6.5% 17.0% 9.5% 10.0% 15.0% 8.4% 51.0% 13.0% 6.8% 100.0% 36.0% 51.0% 20.0% 15.0% 10.0% 10.0%

iGaming Tax 18.0% 22.0% 15.0% ~50% 15.0%

Base GGR NGR GGR GGR GGR GGR GGR GGR GGR NGR GGR GGR GGR GGR NGR GGR GGR NGR GGR GGR

Licensing skins skins skins lottery skins skins skins skins lottery skins lottery skins lottery skins lottery lottery lottery skins lottery

Licenses 20 33 3 ∞ 57 10 48 41 60 15 1 36 ∞ 1 12 1 ∞ 12 15 ∞

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� BetHard was recently acquired in July 2021 in a deal that included a $20M cash payment and an earn-

out based on a 12% of net gaming revenue share agreement for two years. BetHard is also a

sportsbook-focused platform that generated revenue of $31M in 2020. The acquisition offers EEG

licensing into Sweden and Spain. Similar to SportNation, EEG will eventually transition BetHard’s

technology to in-house platforms.

Addressable Market

Longer-term, EEG believes Vie.bet is capable of generating Esportsbook revenue of $180M annually,

which assumes 5% market share within the Esportsbook market. This implies a $3.6bn total addressable

market versus our $4.0bn 2030 forecast. Given EEG’s Omni-channel presence and opportunity to cross-

sell existing sportsbook/iGaming customers, we see view 5% market share as highly achievable.

We also see a substantial opportunity to cross-sell traditional sportsbook and iGaming products to EEG’s

Esportsbook users. For global sportsbook operators that cross-sell iGaming to their user bases, these

operators historically achieve a ~50:50 mix between sportsbook and iGaming revenue. We see a similar

cross-sell opportunity for EEG’s Esportsbook users, where we expect Esportsbook to contribute ~50% of

this segment’s revenues longer-term.

Figure 26: EEG iGaming Long-term Opportunity

Note: GGR indicates gross gaming revenue

Source: ROTH Capital Partners Forecasts

Customer Acquisition

Longer-term, we see EEG pursuing an Esportsbook-first customer acquisition strategy, while cross-selling

iGaming and sportsbook products to its Esportsbook user base. We believe this will be EEG’s

differentiating factor within a highly competitive online gaming industry, where we believe EEG can cost

effectively acquire and monetize Esports fans.

� Cross-selling Esportsbook products to SportNation, Lucky Dino and BetHard users is a near-

term opportunity, but we don’t expect this to be EEG’s core strategy longer-term. These acquisitions

offer EEG a base of ~200,000 users where we see some uptake in Esportsbook usage. That said, this

user base is relatively small relative to EEG’s long-term opportunity. Esports fans also offer little

symmetry between traditional iGaming customers, although Esports are gaining popularity in the U.K.,

Finland and Sweden.

� Marketing affiliates are among the most successful strategies for targeting Esportsbook fans. Given

Esports fans’ preferences for the non-traditional media, using Esports teams and leagues for

advertising is among the few successful strategies for targeting this user base. EEG has entered

marketing agreements with hundreds affiliates and we see these partnerships helping expand the

Esportsbook market. That said, as the Esportsbook industry grows and global operators such as

Flutter and Entain increase focus, we expect marketing affiliate agreements to become increasingly

competitive.

US$M EOSB iGaming

Industry TAM 4,000 170,000

GMBL market share 5.0% 0.1%

GGR Opportunity 200 200

2030E EBITDA 38 41

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� Omni-channel customer acquisition is perhaps EEG’s most differentiating factor in the Esportsbook

industry and we believe this advantage will be difficult to replicate. Alongside EEG’s direct relationships

with Esports fans across its EEG Games segment, EEG has an opportunity to leverage its reach to

promote Esportsbook products across its tournament network. Between EEG’s Helix, ggCircuit and

EGL businesses, EEG interacts with millions of Esports fans each year, and we see that user-base

growing as EEG expands these businesses further.

Within the company’s Helix centers, EEG can advertise its Vie.bet product in states where OSB is

legal. By 2025, we see EEG operating ~20 of these centers across the U.S. and some in Europe,

where each can attract over 100,000 fans each year. Within ggCircuit, EEG’s Esports tournament

software is applied across ~1,000 LAN centers that host ~2M unique Esports fans. We see EEG

entering agreements with these third party LAN-centers to promote Vie.bet as well. Additionally, EGL

has already entered Esports marketing partnerships with major sporting teams and we expect the

company to expand these marketing partnerships to include Esportsbook products.

Within the U.S. Online Gaming industry, operators with land-based operations have leveraged Omni-

channel relationships to create structural advantages in certain markets. This explains why smaller

Omni-channel operators like GNOG and RSI can command impressive market share in major markets

like PA, NJ and IL. Meanwhile, BetMGM’s market share has meaningfully over indexed in states with

MGM casinos (MI and NJ). Similarly, we believe GMBL also has an opportunity to cross-sell its EEG

Games customers to achieve sizable Esportsbook market share.

Figure 27: Omni-Channel Operators – Combined OSB & iGaming Market Share (2Q21)

Source: SEC filings, state gaming commissions

34.9% 34.4%

24.0%

~17%15.2%

~8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

BetMGM

Michigan

Caesars

Iowa

BetMGM

New Jersey

BetRivers

Penn.

BetRivers

Illinois

GNOG

New Jersey

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Forecasts

� EEG is guiding FY2022 revenue of $100-105M.

� We model ~25% revenue growth in FY2023-24.

� We model EEG reporting positive EBITDA in CY4Q22 (FY2Q23).

Revenue Forecasts

After completing eight acquisitions over the past 18 months, EEG is guiding FY2022 revenues of $100-

105M. This implies 60%+ organic revenue growth across the acquired businesses. In FY2023-24, we

model ~25% growth, as Esportsbook and EEG Games ramp and become greater contributors to revenues.

Near-term, however, EEG iGaming will drive revenue growth, as the recently acquired SportNation, Lucky

Dino and BetHard contribute ~85% of FY2022 revenues.

� EEG iGaming: We expect this business to normalize in FY2022 after COVID-19 disrupted sports

betting calendars. EEG has also reaccelerated marketing efforts after growth eased ahead of

acquisition closures. For FY2022, we model negligible Esportsbook revenues but we see this ramping

in FY2023-24.

� EEG Games: Our forecasts involve ggCircuit driving FY2022 revenue growth, with some benefit from

Helix Centers. As Helix visitations ramps post-COVID and ggCircuit acheives greater scale, we expect

EEG Games to be a greater revenue contributor in FY2023-24.

Figure 28: EEG Revenue Forecasts

Source: SEC filings, ROTH Capital Partners Forecasts

EBITDA Forecasts

GMBL expects to generate positive EBITDA by CY4Q2022, or F2Q2023. Near-term, management has

guided cash burn of ~$1M per month. We model margins ramping in FY2023-2024 as EEG achieves scale

against a fixed cost base and as EEG achieves synergies across iGaming brands after integrating tech

platforms and renegotiating third-party contracts. By FY2025, we model 10% EBITDA margins versus our

~25% long-term target. This is unlike U.S. online gaming peers, where we don’t expect positive EBITDA

until ~2025.

US$M FY2021 FY2022E FY2023E FY2024E

EEG iGaming 16 86 101 116

yoy % chg 441% 18% 15%

EEG Games 1 17 28 44

yoy % chg 1686% 65% 56%

Total Revenue 17 103 129 160

yoy % chg 512% 26% 24%

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Figure 29: EEG EBITDA Forecasts ($M)

Source: SEC filings, ROTH Capital Partners Forecasts

($14)

($10)

$2

$10

($20)

($15)

($10)

($5)

$0

$5

$10

$15

FY2021 FY2022E FY2023E FY2024E

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Capital Structure

� We believe EEG has ample financial flexibility to continue investing in growth.

� We model profits inflecting into positive territory by F4Q22.

� We expect EEG to continue pursuing accretive M&A in FY2023 after taking a breather in FY2022.

Balance Sheet

EEG has raised $105M in the past 18 months since up-listing on Nasdaq. This includes a $35M convertible

note ($17.50 strike) issued in June 2021. Excluding the convert with 8% interest (~$700k quarterly interest),

EEG has negligible debt on the balance sheet. As of October 12th

, EEG had $2.4M in unrestricted cash,

although owes an incremental ~$5M in F2Q2022 for the BetHard acquisition.

EEG has several avenues to raise additional capital, including ~$70M remaining on a shelf registration,

$20M from an at-the-money equity program, as well as various opportunities for short-term loan

agreements. With the company continuing to run FCF negative for the next few quarters, we’d expect EEG

to tap one of these within the next several months.

Figure 30: GMBL Capitalization

Source: SEC filings

This includes opportunities to fund future M&A. While EEG plans to take a breather in FY22 after a flurry of

acquisitions, we still expect the company to remain opportunistic. Over time, we expect M&A to be a core

factor in EEG’s strategy, where we expect the company to continue integrating businesses that expand its

reach among Esports fans, while also further developing its technology stack through targeting content and

technology providers.

$M Oct 12 '21 BetHard Pro Forma

Unrestriced Cash $2.4 -$4.7 -$2.3

Convertible Debt $35.0 $35.0

Net Debt $32.6 $37.3

Warrants & Options $61.2

Shelf Registration $70.0

ATM $20.0

Potential Liquidity $151.2

Basic Shares Out. 22.0 22.0

Convert Dilution 2.1

Dilutive Shares 5.8 5.8

Shelf Registration 11.9

ATM 3.4

Potential Shares 27.8 45.3

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Management

EEG’s management team is led by industry veterans from both iGaming and Esports industries.

� Grant Johnson, CEO & Chairman. Mr. Johnson has led as EEG’s CEO since 2013 and has been

instrumental in the company’s early movement into the Esports wagering industry. His extensive

experience in the Online Gaming industry dates back to 1999, where he served as VP at Softec

Systems, a leading B2B iGaming technology provider. Mr. Johnson’s leadership experience also

includes C-suite positions within several technology companies. He graduated with a Bachelor’s

Degree from University of Western Ontario.

� Dan Marks, CFO. Mr. Marks has over 20 years of experience within Online Gaming and corporate

banking industries. Prior EEG’s acquisition of Argyll in 2020, Mr. Marks served as Argyll’s CFO since

2016. Prior to Argyll, Mr. Marks held several leadership positions at major global banks, including

HSBC and Barclays. He graduated from University of Bristol and is a CIMA qualified accountant.

� Stuary Tilly, Chief Legal Officer. Mr. Tilly has over 15 years of experience within the Online Gaming

industry as well as legal experience as a Solicitor. He also joined EEG alongside its acquisition of

Argyll Entertainment, where he served as Co-founder and CEO of Argyll since 2016. Prior to Argyll, he

founded FLIP Sports, a mobile games developer, in 2014 and served as CEO until 2020. In 2012, Mr.

Tilly founded iGaming council, a legal and commercial advisory firm to the Online Gaming industry. He

was also a founding member of the International Social Games Association, an industry trade body for

the Social Gaming industry. He was also a founding member of Game Sparks Limited, a games

platform-as-a-service company. Mr. Tilly has a law degree from University of Exeter and an LPC

Master’s Degree from Nottingham Trent Law School. He was also a Solicitor Magic Circle law firm,

Allen & Overy LLP.

� John Brackens, CIO, CTO & Director. Mr. Brackens joined the company as a tech and gaming

industry expert, with experience in Esports. From 2018-2019, Mr. Brackens was Operations Director

for Carte Blanche Entertainment, an iGaming company. From 2016-2017, he was COO for

Sparkjumpers Pte., company involved in video game development and Esports tournament events.

From 2014-2016, he was Manager of Network Operations of Activision Blizzard. Mr. Brackens studied

Electrical Engineering at Arizona State University.

� Magnus Leppäniemi, President of Esports. Mr. Leppäniemi has over 20 years of experience in the

gaming industry, where he started his career in gaming in 1996. During his tenure, he has sold and

managed global Esports partnerships for major brands and partners including Intel, BenQ Zowie,

Electronic Arts, Activision, ESL, and the NBA. Mr. Leppäniemi has also held roles at Wehype and

DreamHack.

� Jeff Cohen, VP of Strategy and IR. Mr. Cohen joined the company from Stephens Inc, where he

covered Video Games and iGaming as a sell-side research analyst. Prior to Stephens, he worked

within Barclays Investment Banking division. Mr. Cohen has an MBA from Columbia University and a

Bachelor’s Degree from Harvard Univesrsity.

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VALUATION

We apply an 11x multiple to our 2030E EBITDA forecast while discounting that value by 15% annually to reachour $22 TP.

Factors that could impede GMBL from reaching our price target include lower than expected market share,delays in new product roll outs and unfavorable regulatory restrictions.

RISKS■ Slow regulation of Esports betting. While momentum for global deregulation of Esports betting has picked

up, there remain risks that some jurisdictions fail to recognize Esports as a legitimate event for wagering.Issues such as match fixing could also become a regulatory concern, increasing betting restrictions onEsports events.

■ Intensely competitive market. The global Online Gaming industry is highly competitive, where GMBLcompetes against highly sophisticated European operators and major U.S. land-based casinos thathorizontally integrated into iGaming. Many competitors have access to larger marketing budgets which couldincrease the costs of GMBL's customer acquisition costs and weigh on margins over time.

■ Limited market access. GMBL may not be able to attain market access in U.S. gaming markets aslicenses are taken by competitors. Meanwhile, GMBL may initially avoid certain markets with high marketaccess costs. This could give competitors an advantage in gaining market access and consume all availablelicenses, leaving GMBL without market access in certain jurisdictions longer-term.

■ Delays in global gaming expansion. GMBL has a substantial opportunity within the U.S. and LatinAmerica, which are markets that are in early phases of regulation. Delays in online gaming regulation couldrestrict GMBL's growth in these markets. Countries may also deregulate iGaming but include unfavorableterms which could make it more difficult to foster growing markets.

■ Rising data rights costs. Esports leagues may start to demonstrate pricing power over data rights givenexclusivity for events. Major Esports leagues could increase data fees for Esportsbooks which could erodeGMBL's margins.

■ Regulatory risks related to problem gambling. After years of rapid expansion, European markets arefacing a wave of re-regulation after habitual and problem gambling became more prevalent. Increasedregulatory burdens include higher GGR tax rates and greater restrictions on advertising. These efforts couldexpand into less mature markets such as the United States over time.

COMPANY DESCRIPTION

Esports Entertainment Group is a full stack esports and online gambling company fueled by the growthof video-gaming and the ascendance of esports with new generations. EEG's mission is to help connectthe world at large with the future of sports entertainment in unique and enriching ways that bring fans andgamers together. Esports Entertainment Group and its affiliates are well-poised to help fans and players tostay connected and involved with their favorite esports. From traditional sports partnerships with professionalNFL/NHL/NBA/FIFA teams, community-focused tournaments in a wide range of esports, and boots-on-the-ground LAN cafes, EEG has influence over the full-spectrum of esports and gaming at all levels. The Companymaintains offices in New Jersey, the UK and Malta.

Source: esportsentertainmentgroup.com

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Edward Engel, CFA

ROTH Capital Partners

[email protected]

646-616-2785

days 365 366 92 92 90 91 365 92 92 90 91 365 92 92 90 91 365 365 365

FY2019 FY2020 1Q21 2Q21 3Q21 4Q21 FY2021 1Q22E 2Q22E 3Q22E 4Q22E FY2022E 1Q23E 2Q23E 3Q23E 4Q23E FY2023E FY2024E FY2025E

GMBL (US$M) June '30 FY Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23

Income Statement

Total revenue - 0.2 2.4 5.4 8.8 16.8 16.8 26.0 28.6 31.3 102.8 31.2 30.8 32.5 35.0 129.4 160.3 184.8

yoy % chg 7458.7% 1001.4% 430.6% 255.9% 512.5% 85.4% 18.5% 13.3% 11.6% 25.9% 23.8% 15.3%

Cost of revenue - - 0.4 1.3 2.3 3.6 7.9 6.9 10.7 11.5 12.2 41.2 10.9 10.8 11.4 12.2 45.3 52.9 55.4

Sales & marketing - - 0.6 1.9 2.4 5.1 10.0 9.2 13.0 14.3 15.7 52.2 14.0 13.9 14.6 15.7 58.2 64.1 73.9

G&A 3.0 4.0 3.1 4.9 6.3 10.5 24.6 11.0 11.0 10.0 10.0 42.0 11.0 11.0 11.0 11.0 44.0 47.1 50.4

Total OpEx 3.0 4.0 4.1 8.1 11.0 19.3 42.5 27.1 34.7 35.8 37.9 135.5 35.9 35.7 37.0 39.0 147.5 164.1 179.7

Operating income (3.0) (4.0) (3.9) (5.8) (5.6) (10.5) (25.7) (10.3) (8.7) (7.1) (6.6) (32.7) (4.8) (4.8) (4.5) (4.0) (18.1) (3.8) 5.1

yoy % chg 34.3% 456.7% 762.5% 918.7% 390.7% 535.3% 167.7% 50.1% 27.1% -37.5% 27.0% -53.9% -44.2% -36.8% -38.9% -44.6% -79.0% -232.9%

Interest expense (5.6) (2.0) 0.0 - - (0.7) (0.7) (1.0) (1.0) (1.0) (1.0) (4.1) (1.0) (1.0) (1.0) (1.0) (4.1) - -

Change in FV of derivative 2.2 (1.7) - - - - - - - - - - - - - - - - -

Change in FV of contingent - - - - (1.3) (0.4) (1.7) - - - - - - - - - - - -

Change in FV of warrant - - 2.1 (1.5) (5.4) 3.2 (1.5) (0.3) (0.3) (0.3) (0.3) (1.1) (0.3) (0.3) (0.3) (0.9) (1.6) - -

Other 0.0 (2.6) (0.1) (0.0) (0.2) (0.2) (0.5) - - - - - - - - - - - -

Pre-tax income (6.4) (10.3) (1.8) (7.3) (12.4) (8.6) (30.2) (10.3) (8.7) (7.1) (6.6) (32.7) (4.8) (4.8) (4.5) (4.0) (18.1) (3.8) 5.1

Income taxes (0.0) (0.0) - - - 3.8 3.8 - - - - - - - - - - - (0.3)

tax rate % 0.2% 0.0% 0.0% 0.0% 0.0% -44.1% -12.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% -5.0%

Net income (loss) to GMBL (6.4) (10.4) (1.8) (7.3) (12.4) (4.8) (26.4) (10.3) (8.7) (7.1) (6.6) (32.7) (4.8) (4.8) (4.5) (4.0) (18.1) (3.8) 4.8

yoy % chg 62.2% -36.3% 137.6% 97.3% -359.1% 154.8% 471.1% 18.8% -42.7% 35.7% 23.9% -53.9% -44.2% -36.8% -38.9% -44.6% -79.0% -226.3%

Basic EPS -$1.50 -$0.15 -$0.57 -$0.73 -$0.23 -$1.68 -$0.47 -$0.35 -$0.28 -$0.26 -$1.34 -$0.19 -$0.19 -$0.18 -$0.14 -$0.70 -$0.14 $0.17

Diluted EPS -$0.15 -$0.57 -$0.73 -$0.23 -$1.68 -$0.47 -$0.35 -$0.28 -$0.26 -$1.34 -$0.19 -$0.19 -$0.18 -$0.14 -$0.70 -$0.14 $0.14

yoy % chg 216.2% -38.8% -61.3% 12.3% -19.9% -59.9% -45.0% -37.8% -44.4% -48.1% -80.5% -203.3%

Basic WASO 5.8 6.9 12.2 12.9 17.0 20.8 15.7 22.0 25.0 25.1 25.2 24.3 25.3 25.4 25.5 27.7 26.0 28.0 28.4

Dilutive WQSO 6.0 5.6 1.9 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8 5.8

Diluted WASO 5.3 18.2 18.5 18.8 26.7 21.5 27.8 30.8 30.9 31.0 30.1 31.1 31.2 31.3 33.5 31.8 33.8 34.2

dilution - 3.0 0.1 0.1 0.1 0.1 0.1 2.2

Net income (loss) (10.4) (1.8) (7.3) (12.4) (4.8) (26.4) (10.3) (8.7) (7.1) (6.6) (32.7) (4.8) (4.8) (4.5) (4.0) (18.1) (3.8) 4.8

D&A 0.0 0.3 0.5 0.9 1.9 3.6 2.4 2.4 2.4 2.4 9.5 2.3 2.3 2.3 2.3 9.0 8.7 8.7

Interest, net 2.0 0.0 - - 0.7 0.7 1.0 1.0 1.0 1.0 4.1 1.0 1.0 1.0 1.0 4.1 - -

Income tax 0.0 - - - (3.8) (3.8) - - - - - - - - - - - 0.3

Transaction costs (0.2) 0.3 1.3 2.1 3.5 3.0 1.0 - - 4.0 - - - - - - -

Litigation settlement 0.1 - - 0.5 (0.0) 0.5 - - - - - - - - - - - -

Non-operating costs (0.2) 0.2 0.1 0.2 0.2 0.5 - - - - - - - - - - - -

Financial costs 4.5 (2.1) 1.5 6.7 (2.7) 3.3 0.3 0.3 0.3 0.3 1.1 0.3 0.3 0.3 0.9 1.6 - -

Share-based comp 1.6 1.0 1.3 0.7 1.1 4.1 1.1 1.4 0.8 1.2 4.5 1.2 1.6 0.9 1.3 5.0 5.5 6.0

Adj. EBITDA (2.3) (2.6) (3.8) (2.1) (5.5) (14.0) (2.6) (2.6) (2.7) (1.7) (9.5) (0.0) 0.3 (0.1) 1.4 1.6 10.4 19.8

yoy % chg -1.8% -32.3% 24.8% -68.6% -32.1% -99.2% -110.4% -96.8% -182.2% -116.5% 558.3% 90.8%

margin -15.3% -9.9% -9.3% -5.5% -9.3% -0.1% 0.9% -0.3% 4.0% 1.2% 6.5% 10.7%

Source: GMBL SEC filings; ROTH Capital Partners Forecasts

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Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifiesthe following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal viewsabout the subject company or companies and its or their securities. I also certify that no part of my compensation was, is orwill be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Disclosures:Within the last twelve months, ROTH Capital Partners, or an affiliate to ROTH Capital Partners, has received compensationfor investment banking services from Esports Entertainment Group, Inc. and Bally's Corporation.

Within the last twelve months, ROTH Capital Partners, or an affiliate to ROTH Capital Partners, has managed or co-manageda public offering for Bally's Corporation.

ROTH makes a market in shares of Caesars Entertainment, Inc., Draftkings, Inc., Penn National Gaming, Inc. and RushStreet Interactive, Inc. and as such, buys and sells from customers on a principal basis.

Within the last twelve months, ROTH has received compensation for non-investment banking securities-related servicesfrom Caesars Entertainment, Inc..

Rating and Price Target History for: Esports Entertainment Group, Inc. (GMBL) as of 11-01-2021

20

15

10

5

0Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022

Created by: BlueMatrix

Rating and Price Target History for: Draftkings, Inc. (DKNG) as of 11-01-2021

80

70

60

50

40

30

20

10

0Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022

10/12/21I:S:$41


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Rating and Price Target History for: Penn National Gaming, Inc. (PENN) as of 11-01-2021

140

120

100

80

60

40

20

0Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022

10/12/21I:B:$107


Rating and Price Target History for: Rush Street Interactive, Inc. (RSI) as of 11-01-2021

30

25

20

15

10

5Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022

10/12/21I:B:$24


Rating and Price Target History for: salesforce.com, Inc. (CRM) as of 11-01-2021

350

300

250

200

150

100Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022

02/26/20N:$165

08/26/20N:$200

08/26/21N:$242


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Rating and Price Target History for: Caesars Entertainment, Inc. (CZR) as of 11-01-2021

140

120

100

80

60

40

20

0Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022


Rating and Price Target History for: MGM Resorts International (MGM) as of 11-01-2021

50

40

30

20

10

0Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022


Rating and Price Target History for: Wynn Resorts, Limited (WYNN) as of 11-01-2021

160

140

120

100

80

60

40Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 Q3 2022


Each box on the Rating and Price Target History chart above represents a date on which an analyst made a change to arating or price target, except for the first box, which may only represent the first note written during the past three years.Distribution Ratings/IB Services shows the number of companies in each rating category from which Roth or an affiliatereceived compensation for investment banking services in the past 12 month.Distribution of IB Services Firmwide

IB Serv./Past 12 Mos.

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as of 11/02/21Rating Count Percent Count PercentBuy [B] 327 78.42 221 67.58Neutral [N] 48 11.51 26 54.17Sell [S] 2 0.48 1 50.00Under Review [UR] 38 9.11 25 65.79

Our rating system attempts to incorporate industry, company and/or overall market risk and volatility. Consequently, at anygiven point in time, our investment rating on a stock and its implied price movement may not correspond to the stated 12-month price target.

Ratings System Definitions - ROTH employs a rating system based on the following:

Buy: A rating, which at the time it is instituted and or reiterated, that indicates an expectation of a total return of at least10% over the next 12 months.

Neutral: A rating, which at the time it is instituted and or reiterated, that indicates an expectation of a total return betweennegative 10% and 10% over the next 12 months.

Sell: A rating, which at the time it is instituted and or reiterated, that indicates an expectation that the price will depreciateby more than 10% over the next 12 months.

Under Review [UR]: A rating, which at the time it is instituted and or reiterated, indicates the temporary removal of theprior rating, price target and estimates for the security. Prior rating, price target and estimates should no longer be reliedupon for UR-rated securities.

Not Covered [NC]: ROTH does not publish research or have an opinion about this security.

ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other businessrelationships with the covered companies mentioned in this report in the next three months. The material, information andfacts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are fromsources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be usedas a complete analysis of the company, industry or security discussed in the report. Additional information is available uponrequest. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report aresubject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actualresults to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a highdegree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without theexpress written permission of ROTH. Copyright 2021. Member: FINRA/SIPC.

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buy esports entertainment group, inc

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