GAN Limited (GAN) intends to raise $35 million in a U.S. IPO of its common stock.

The firm sells software to casinos for their online casino gaming and sports betting business segments.

GAN has sharply grown revenue, net profits and cash flow from operations in recent reporting periods.

Chief Executive Officer Mr. Dermot Smurfit leads GAN and has been with the firm since 2003 as a director; he was previously in the European Investment Banking unit of SoundView Technology Group.

Below is a brief overview video of the possible future of online sports betting in the U.S.:

Source: Wall Street Journal

The company has created partnerships for Simulated Gaming, Real Money Gaming, and with Integration Partners.

GAN’s primary offering is GameSTACK, a platform that provides back-office tools:

  • Player account activation
  • Payment services
  • Geolocation
  • Marketing
  • Loyalty management
  • Real-time analytics and reporting

The service is primarily aimed at U.S. casino operators, although GAN has marketed versions of it to operators in the U.K., Italy and Australia.

For its primary U.S. market, management believes that 'half of all online sports wagers in the states of New Jersey and Pennsylvania, the two largest and fastest growing U.S. markets for online sports betting, are presently processed using [its] platform.'

GAN had 25 total customers as of March 17, 2020 and markets its software suite directly to casino or simulated money operators.

Sports betting activity has enjoyed significant growth since May 2018 when the U.S. Supreme Court reversed the Professional and Amateur Sports Protection Act [PASPA] which had precluded many U.S. states from regulating sports betting at the state level.

Administrative expenses as a percentage of total revenue have dropped as revenues have grown, with 2019’s administrative expenses coming in at 50.4% of total revenue, a reduction from 2018’s figure of 73%.

According to a 2019 market research report by Grand View Research, the market for online gambling reached $48.5 billion in 2018.

This represents a forecast CAGR (Compound Annual Growth Rate) of 11.5% from 2019 to 2025.

The main drivers for this expected growth are continued increase in internet gambling penetration, higher use of smartphones for playing online games, wider legalization within the U.S. and overseas and greater acceptance, corporate sponsorships and celebrity endorsements.

The chart below shows the historical and estimated future growth and breakdown of the U.S. online gambling market:


The firm’s primary competition comes from retail casinos that create their own in-house systems and online casinos that develop competing content.

But, in response, management believes its ability to update its system for the differing regulatory environment among U.S. states is a competitive advantage.

GAN’s recent financial results can be summarized as follows:

  • Sharp growth in topline revenue
  • Strong growth in gross profit and gross margin
  • A swing to operating profit
  • Sharp increase in cash flow from operations

Below are the firm’s financial results for the past two calendar years:

GAN Limited Profit & Loss

GAN Limited Profit & Loss

Source: Company registration statement

As of December 31, 2019, GAN had $10.1 million in cash and $11.0 million in total liabilities.

Free cash flow during the twelve months ended December 31, 2019, was $6.1 million.

GAN has filed to raise $35 million in gross proceeds from an IPO of its common stock, although the final amount may differ as this is typically just a placeholder figure.

Management says it will use the net proceeds from the IPO for working capital and general corporate activities such as sales & marketing, product development and CapEx.


GAN is seeking to go public on U.S. markets as it shows the beginnings of an enviable revenue ramp.

The firm’s financials have shown strong revenue growth, net profits and increasing cash flow from operations.

Administrative expenses have dropped as a percentage of revenue as revenues rise, a positive signal.

The market opportunity for selling online betting software in the U.S. appears to be strong, due in part to the aftermath of a favorable Supreme Court ruling for the industry in 2018.

GAN represents a potentially interesting opportunity in the gaming and entertainment sector as it is selling the ‘picks and shovels’ to casino operators via a SaaS software bundle.

I look forward to learning management’s IPO assumptions on pricing and valuation and will provide a final opinion at that time.

Expected IPO Pricing Date: To be announced.

(I have no positions in any stocks mentioned, no plans to initiate any positions within the next 72 hours, and no business relationship with any company whose stock is mentioned in this article. Information provided is for educational purposes only, may be incomplete or out of date, and does not constitute financial, legal, or investment advice.)