Covid-19 enforced land-based closures harm Inspired revenue

31 March 2020

Inspired Entertainment has implemented a range of actions to maintain financial flexibility and preserve liquidity after revealing that the closure of clients’ retail facilities due to novel coronavirus (Covid-19) has affected its revenue streams.

Since the middle of March, when the coronavirus had spread more widely across regions worldwide, Inspired has drawn down around $24.9m (£20.2m/€22.7m) on its revolving credit facility to provide additional near-term liquidity and also cancelled or delayed material capital expenditures.

Inspired also implemented furloughs across its business, reduced work hours and lowered compensation. Inspired said that these actions, along with other measures, are set to reduce its future cash payroll expense by around 70% to less than $2.0m per month.

In addition, the Inspired board has approved plans to indefinitely delay payment of executive bonuses for the year ended December 31, 2019, as well as waive cash payments of board retainers that were due to be disbursed during the second quarter of 2019. 

Inspired said that these measures would help support its overall aim of achieving a breakeven monthly EBITDA level by May 2020 or soon after.

“We have taken these decisive actions, which we believe are appropriate for our current level of business, as we prepare our company to withstand a potentially prolonged period of impaired revenue, including the loss of much of our retail revenue,” Inspired’s executive chairman Lorne Weil said.

“At this point, we have limited visibility as to when our customers' land-based locations may reopen. We believe our actions are appropriate steps to preserve our liquidity given the current environment.

“That said, we continue to undertake aggressive efforts to reduce our operating expenses on an interim basis and expect to report further as these steps are implemented.”

Despite the impact of coronavirus on its land-based activities, Weil said that as Inspired’s virtual sports and gaming businesses have a significant presence in markets not as badly impacted by coronavirus, this would help soften the blow.

“We have been fortunate that each of our virtual sports and gaming businesses have had a substantial and growing presence in online/interactive, providing us an important cushion against the current cessation in our land-based business,” Weil said.

“Our customers have reported to us that they are experiencing significant demand from consumers in the US, Europe and Australasia to bring virtual sports onto their respective systems as rapidly as possible, given the lack of live sports content for wagering.”

This area of the business looks set for further growth after Inspired agreed a deal to launch its V-Play Basketball and NFLA Legends Football virtual sports games with online gambling operator bet365.

Under the agreement, bet365 will run two dedicated V-Play Basketball streams; one based on US basketball and the other focusing on European events, with a new game every two minutes.

Bet365 will also become the first operator to feature the NFLA Legends Football, a new game developed in partnership with NFL Alumni, the official organisation of former NFL American football league players, coaches and staff.

V-Play NFLA Legends Football features 11 teams of alumni legends from some of the biggest teams going head-to-head in a single game format over a period of 90 seconds. 

Bet365 said: “We haven’t seen any virtual sports quite like V-Play Basketball and V-Play NFLA Legends Football.  They are great products, both visually and in the betting opportunities they offer the players. 

“We are very excited to be launching these products and we have no doubt they will be successful additions to our current virtual sports offerings.”

The virtual sports and esports markets have seen significant activity in recent weeks due to the shut-down of many major sports events around the world as a result of the coronavirus.

Last week, EveryMatrix enhanced its OddsMatrix service to help customers move into the esports betting sector, while the Formula 1 motor-racing series launched a new esports competition in place of the races that have been postponed due to coronavirus.