Publicly traded gambling platform operator EBET, Inc. underwent significant changes as several key executives and board members resigned amidst ongoing financial challenges, according to a U.S. Securities & Exchange Commission (SEC) filing published on Aug. 1.
The company—which went public as Esports Technologies, Inc. in April 2021 and raised $14.4M USD in gross proceeds in the process—initially operated gambling platforms focused on esports and competitive gaming. A little over a year after its IPO, the company renamed to EBET, Inc. and expanded its product portfolio with general sportsbook and casino platforms targeting the “Millennial and Gen Z wagering market.”
EBET’s financial difficulties trace back to a forbearance agreement (an arrangement to pause debt payments or make smaller payments) signed on June 30, 2023, with CP BF Lending, LLC—an investment arm of the Seattle-based alternative asset management firm Columbia Pacific Advisors—acknowledging EBET’s default under a credit term. Despite several amendments, EBET’s situation deteriorated, leading to a termination event on June 17, 2024, when the lender ceased forbearance. At that time, EBET owed more than $37M, an amount it was unable to repay.
The situation culminated in a public foreclosure auction on Aug. 1 (today), where EBET’s subsidiary Karamba Limited and its associated websites and other assets were sold. Following the auction, EBET, Inc. ceased all business operations.
Consequently, Aaron Speach, the chief executive officer and president, along with Chief Financial Officer Matthew Lourie, stepped down from their positions. Additionally, board members Aaron Speach, Christopher Downs, Dennis Neilander, and Michael Nicklas resigned.
The gambling platform operator’s financial troubles are reflected in its latest financial filing in May for the second quarter and six months ended March 31; EBET reported Q2 sales of $3.52M, compared to $11.58M in Q2 2023. The company also recorded a net loss of $5.05M during Q2, compared to a $4.01M net loss in Q2 2023. For H1 2024, sales were $7.81M, compared to $25.99M in H1 2023, with a net loss of $8.87M, compared to a net loss of $11.57M in H1 2023.
EBET joined the Esports Integrity Commission (ESIC) as an “Anti-Corruption Supporter” in August 2021, but its impact on actual businesses within the esports sector appears to be minimal at best. Unlike other gambling operators with a focus on esports, EBET did not allocate a significant budget to esports sponsoring. Nevertheless, it was a sponsor of smaller esports events such as the $7,500 prize pool CS:GO SiGMA Esports Cup in Toronto, as part of the SiGMA iGaming Summit.
EBET is by no means the first gambling operator with a focus on esports to fall into financial disrepair and eventually cease business. Other examples include the “Rise and Fall of Swedish Esports Company Stryda (formerly G-Loot)” or the Dutch Supreme Court declaring the 1xBet group—at the time a partner of Tundra Esports, OG, Team Spirit, and PSG—bankrupt at the start of 2023.