In 2021, the revenue for the esports industry was only $25,174, which was a 66.6% decrease compared to the previous year. This revenue was generated solely from the Isle of Man.
Although the overall revenue was lower, the costs of sales slightly increased to $290,286. This increase was primarily due to a 24.1% rise in platform and service provider fees, amounting to $277,994. However, the cost of free bets decreased significantly by 80.8%, reaching $12,292. Consequently, the business experienced a gross loss of $265,112, showing a 24.8% increase compared to the previous year.
The operating expenses also saw a significant rise of 62.1%, totaling $8.4 million. These expenses included $1.9 million in share-based compensation, a 113.0% increase, $1.7 million in salaries and director fees, a 12.2% increase, and $1.4 million in consulting fees, a 111.2% increase. Furthermore, the business incurred $1.3 million in legal and professional fees and $943,234 in advertising and marketing costs. After deducting $40,799 in interest income, the business ended up with a pre-tax loss of $8.6 million, which was a 57.0% increase compared to the previous year. The business paid only $6,061 in taxes, resulting in a final loss of $8.6 million, also up 57.0%.
Thomas Rosander, the Chief Executive Officer, stated that the focus of the business in 2021 was on enhancing and extending their proprietary platform and infrastructure. This positioning would enable them to launch player acquisition efforts in 2022. Rosander emphasized their aim to optimize marketing spend and player value through a next-generation wagering platform powered by superior business intelligence infrastructure. He also mentioned the addition of new verticals, including online casino, as part of their plan to build a betting platform for a new generation of players in 2021.
Throughout the year, the business made numerous platform improvements, announced eight new partnerships, and further strengthened their team. In addition to their core esports offering, they expanded into sports wagering, providing fans with the opportunity to bet on various daily markets in sports such as football, basketball, soccer, and hockey. They concluded the year by launching an online casino, which is expected to bring a near-term revenue stream. Rosander highlighted his previous successes in the online casino industry during his tenure as the CEO of Dunder.
The business is eagerly anticipating the launch of their offerings in Ontario and plans to enter additional regulated markets in 2022.
