Future Gaming Group (FGG) is a fast growing iGaming company. Its main focus is on affiliation, but it also has an operator business in online casino and sports betting. The affiliation is mainly done through paid media (PPC) in regulated markets, which means the company is paying for traffic to its customers, i.e. the operators. Due to a broad customer base with exposure to several different verticals, FGG runs various revenue models depending on the customer’s characteristics, e.g. a revenue-share model, CPA (cost per acquisition) or a hybrid of these. FGG has an active M&A agenda and aims to capitalize on the fragmented market.
The iGaming market is highly fragmented, which offers attractive M&A opportunities. The market is characterized by high growth, mainly due to a shift from offline to online gambling. This shift is notable in all segments, i.e. sports betting, casino, poker etc. Recently there have been several favorable news articles about FGG in the US, which we see as an attractive market for the company in the near future. Since FGG is mainly active in paid media, we think establishing itself in new markets could be done fairly easily. Also, further expansion into other verticals could be a driver going forward.
The main risk for Future Gaming Group is that it has recently taken on a lot of debt. Also, several acquisitions have been completed. If these acquisitions perform worse than anticipated, the company could find itself in a distressed financial position. Another risk is that the company’s current group structure is relatively immature, due to diversion of the older operations and new appointed management. Furthermore, sales can be volatile q-o-q, and as the market matures, increased competition could affect prices and therefore margins.