theScore’s sportsbook product made a $1.4m loss in its first full year in operation, after accounting for bonuses and unsettled bets, with the the novel coronavirus (Covid-19) pandemic checking the product’s momentum during the period.
The business, comprising the sports betting and core media businesses, made CAD$20.7m ($15.5m) in revenue for the year ended 31 August, down 31.2% year-on-year.
However, the betting division of the business generated only $253,000 in gross gaming revenue in its first year of activity, on stakes of $41.3m. After taking into account promotional costs and the values of unsettled bets, theScore posted a loss of $1.4m from wagering operations.
theScore founder and chief executive John Levy (pictured left) said the betting division had been off to a strong start before the impact of Covid-19.
“Fiscal 2020 began with the momentous launch of our gaming operations, with theScore Bet debuting in New Jersey,” Levy said. “We were seeing great early momentum when, along with the rest of the industry, we had to adjust to the global disruption to sports brought on by the Covid-19 pandemic.”
Of theScore’s overall revenue, $9.2m came from its home country of Canada, with a further $11.2m coming from other markets, primarily the US.
The business’ operating expenses, meanwhile, grew 38.9% to $56.6m.
Technology and operations costs were the largest expense, growing by 110.4% to $16.2m due to the work buiding and maintaining the betting product.
General and administrative costs grew 31.2% to $13.8m and sales and marketing costs grew 26.2% to $13.0m, largely due to marketing efforts for theScore Bet.
Product development and content costs declined 11.1% to $8.1m, which it said was largely due to lower personnel costs.
The business said it achieved this without laying off staff, as it received $4.4m in wage subsidies from the Canadian government to help it manage personnel costs during the pandemic. In addition, all senior staff took a 25% pay cut.
These expenses resulted in an earnings before interest, tax, deprecation and amortisation (EBITDA) loss of $30.5m, up 369.3% compared to its EBITDA loss a year prior.
Depreciation and amortisation expenses were up 73.2% to $5.4m. This resulted in the business’ operating loss widening 273.7% year-on-year to $35.9m.
After a further $5.2m in finance charges, theScore’s pre-tax loss came to $41.0m, up 336.1% from the amount it lost a year prior.
The net loss, however, was reduced slightly be a $3.1m deferred income tax benefit, coming in at $37.9m, more than four times its losses in the prior fiscal year. After adjusting for currency differences, this loss came to $37.4m, just under four times the amount it lost in 2019.
Looking just at the fourth quarter of the fiscal year, revenue came to $2.5m, down 61.0%, as suspension of major sports leagues for much of the quarter had a significant impact on revenue. Gross gaming revenue came to negative $500,000 for the quarter on $14.8 worth of bets, while net gaming revenue after promotions and adjusting unsettled bets was negative $1.2m.
For the quarter, revenue from Canada came to $1.9m and $600,000 came from other locations.
Operating expenses for the quarter totaled $12.1m, up 7.1%.
Technology and operations were by far the biggest expense of the quarter, at $4.8m, up 81.3%. General and administrative expenses were up 16.2% at $3.1m while sales and marketing costs were down 40.0% at $1.6m. Product development and content costs were down 48.8% to $1.3m, resulting in an EBITDA loss of $8.3m, almost exactly double Q4 FY2019’s EBITDA loss.
A further $1.4m of depreciation and amortisation costs were incurred for an operating loss of $9.6m.
After $3.1m in financial losses, theScore’s net loss was $12.7m for the quarter.
Levy said that the return of US sports and September launches in Colorado and Indiana mean that the year ended 31 August 2021 looks like it could be much more positive, with betting revenues already several times greater than in the same months of FY2020.
“With sports leagues now back in action, our media and gaming operations are thriving again in early Q1 F2021,” he said. “Our unique formula of fusing media with gaming is resonating with fans, with total gaming handle on theScore Bet up more than 500% year-over-year in September with that momentum continuing into October too.
“We’re also excited by the early momentum in Colorado and Indiana, contributing to an extremely strong start to our new fiscal year across gaming and media.”
In addition, theScore’s media division started the 2020-21 year well, thanks to record advertising revenue in September, in a period where multiple major leagues were in action.
“We are in a strong position to build on this momentum throughout F2021, further leveraging the power of media and gaming, bringing theScore Bet to more states, and exploring opportunities to add to our existing market access footprint,” Levy said.
The business also plans to launch an online casino product in New Jersey, after striking a market access agreement with Twin River Worldwide Holdings. This product is expected to be rolled out in the second half of 2021.