SPECIAL
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements. These forward-looking statements contain information about our expectations, beliefs
or intentions regarding our product development and commercialization efforts, business, financial condition, results of operations,
strategies or prospects, and other similar matters. These forward-looking statements are based on management’s current expectations
and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult
to predict. These statements may be identified by words such as “expects,” “plans,” “projects,” “will,”
“may,” “anticipates,” “believes,” “should,” “intends,” “estimates,”
and other words of similar meaning.
These
statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ
materially from current expectations include, among other things, those listed under the section titled “Risk Factors” and
elsewhere in this prospectus, in any related prospectus supplement and in any related free writing prospectus.
Any
forward-looking statement in this prospectus, in any related prospectus supplement and in any related free writing prospectus reflects
our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our
business, results of operations, industry and future growth. Given these uncertainties, you should not place undue reliance on these
forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this prospectus, any related
prospectus supplement and any related free writing prospectus and the documents that we reference herein and therein and have filed as
exhibits hereto and thereto completely and with the understanding that our actual future results may be materially different from any
future results expressed or implied by these forward-looking statements. Except as required by law, we assume no obligation to update
or revise these forward-looking statements for any reason, even if new information becomes available in the future.
This
prospectus, any related prospectus supplement and any related free writing prospectus also contain or may contain estimates, projections
and other information concerning our industry, our business and the markets for our products, including data regarding the estimated
size of those markets and their projected growth rates. Information that is based on estimates, forecasts, projections or similar methodologies
is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected
in this information. Unless otherwise expressly stated, we obtained these industry, business, market and other data from reports, research
surveys, studies and similar data prepared by third parties, industry and general publications, government data and similar sources.
In some cases, we do not expressly refer to the sources from which these data are derived.
PROSPECTUS
SUMMARY
This
summary highlights certain information about us, this offering and information appearing elsewhere in this prospectus and in the documents
we incorporate by reference. This summary is not complete and does not contain all of the information that you should consider before
investing in our securities. To fully understand this offering and its consequences to you, you should read this entire prospectus carefully,
including the information referred to under the heading “Risk Factors” in this prospectus beginning on page 14, the financial
statements and other information incorporated by reference in this prospectus when making an investment decision. This is only a summary
and may not contain all the information that is important to you. You should carefully read this prospectus, including the information
incorporated by reference therein, and any other offering materials, together with the additional information described under the heading
“Where You Can Find More Information.”
THE
COMPANY
Overview
Corporate
History
Esports
Entertainment Group, Inc. (“EEG”) was formed in the State of Nevada on July 22, 2008 under its prior name Virtual
Closet, Inc. Virtual Closet, Inc. changed its name to DK Sinopharma, Inc. on June 6, 2010. DK Sinopharma, Inc. changed its name to
VGambling, Inc. on August 12, 2014. On or about April 24, 2017, VGambling, Inc. changed its name to Esports Entertainment Group,
Inc. The company was engaged in a number of different enterprises up until May 20, 2013, when, pursuant to the terms of the Share
Exchange Agreement, they acquired all of the outstanding capital stock of H&H Arizona Corporation in exchange for 3,333,334
shares of its common stock. From May 2013 until August 2018, its operations were limited to designing, developing and testing its
wagering systems. They launched their online esports wagering website (www.vie.gg) in August 2018.
Business
Overview
EEG
is the competitive playing of video games by amateur and professional
teams as a spectator sport. Esports typically takes the form of organized, multiplayer video games that include genre’s such as
real-time strategy, fighting, first-person shooter and multiplayer online battle arena games. As of June 30, 2021, the three most popular
esports games were Dota 2, League of Legends (each multiplayer online battle arena games) and Counter Strike: Global Offensive
(a first-person shooter game). Other popular games include Fortnite, StarCraft II, Call of Duty¸ Overwatch,
Hearthstone and Apex Legends. Most major professional esports events and a wide range of amateur esports events are broadcast
live via streaming services including twitch.tv and youtube.com.
EEG is an esports focused iGaming and entertainment company with a global footprint. EEG’s
strategy is to build and acquire betting and related platforms, and lever them into the rapidly growing esports vertical. We operate
the business in two verticals, EEG iGaming and EEG Games.
EEG
iGaming:
In
the EEG iGaming vertical, we have a best-in-class esports betting platform with full casino and sportsbook functionality. Our in-house
gambling software platform, Phoenix, is a modern reimagined sportsbook that caters to both millennial esports bettors as well as traditional
sports bettors. Phoenix is being developed through the assets and resources of FLIP Sports Limited, a software development company, that
we acquired in September 2020.
EEG’s
goal is to be a leader in the large and rapidly growing sector of esports real-money wagering, offering fans the ability to wager on
professional esports events in a licensed and secure environment. From February 2021, under the terms of their Maltese Gaming Authority
(MGA) license, we are now able to accept wagers from residents of over 180 jurisdictions including countries within the European Union,
Canada, New Zealand and South Africa, on our ‘‘Vie.bet’’ platform.
Alongside
the Vie.bet esports focused platform, EEG owns and operates:
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Argyll
Entertainment’s flagship Sportnation.bet online sportsbook and casino brand, licensed in the UK and Ireland,
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Lucky
Dino’s 5 online casino brands licensed by the MGA on its in-house built iDefix casino-platform, and
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The
recently acquired Bethard online sportsbook and casino brands, operating under MGA, Spanish, Irish and Swedish licenses.
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On
August 20, 2020, EEG announced entry into a multi-year partnership with Twin River Worldwide Holdings, Inc (NYSE: TRWH), now Bally’s
Corporation (NYSE: BALY), to launch their proprietary mobile sports betting product, ‘‘Vie.gg’, in the state of New
Jersey. EEG intends to have this platform, which was previously licensed in Curacao, live in the state during August 2021 or soon thereafter.
In
total EEG currently holds three Tier-1 gambling licenses (Malta, UK, Ireland, Spain and Sweden) and are in the process of acquiring one
additional (New Jersey). Our acquisitions of Argyll Entertainment, Lucky Dino and Bethard provide a foothold in mature markets in Europe
into which we believe we can cross-sell our esports offerings.
EEG
Games:
In
the EEG Games vertical, focus is on providing esports entertainment experiences for every gamer. We do this through a combination of
1) in-person experiences (at Helix Centers), 2) online tournaments (through their recently acquired EGL tournament platform), and 3)
player-vs-player wagering (through their soon-to-be-released LANDuel product). In order to provide exposure for our platforms, we have
signed numerous exclusive marketing relationships with professional sports organizations across the NFL, NBA, NHL and MLS.
Underpinning
our EEG Games vertical is our proprietary infrastructure software, ggCircuit. ggCircuit is the leading provider of local area network
(“LAN”) Center management software, enabling us to seamlessly manage mission critical functions such as game licensing and
payments.
Recent
Developments
Entry
into a Securities Purchase Agreement with Investor
On
May 28, 2021, we entered into a Securities Purchase Agreement (“Purchase Agreement”) with an institutional investor (the
“Investor”) pursuant to which we sold a Senior Convertible Note dated June 2, 2021, with an initial principal amount of $35
million (the “Convertible Note”) in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of
1933, as amended, and Rule 506 of Regulation D promulgated thereunder. The Convertible Note bears interest at a rate of 8% per annum
and matures two years following the date of issuance (the “Maturity Date”, subject to extension in certain circumstances,
including bankruptcy and outstanding events of default). In addition to the principal amount the Company is required to pay an additional
amount equal to 6% of the outstanding principal amount. After the occurrence and during the continuance of an Event of Default (as defined
in the Convertible Note), the Convertible Note will accrue interest at the rate of 12.0% per annum.
The
Convertible Note is convertible, at the option of the holder, into shares of the Company’s common stock at a conversion price of
$17.50 per share. The Convertible Note is subject to a most favored nations provision and standard adjustments in the event of any stock
split, stock dividend, stock combination, recapitalization or other similar transaction. If we enter into any agreement to issue (or
issue) any variable rate securities, the noteholder has the additional right to substitute such variable price (or formula) for the conversion
price.
In
connection with the sale of the Convertible Note, the Company issued two warrants to the Investor , the Series A Warrant and Series B
Warrant. Pursuant to the Series A Warrant, issued by the Company in favor of the Investor, the investor shall have the right to purchase
2,000,000 shares of the Company’s common stock at an exercise price of $17.50 per share. The Series A Warrant expires in 4 years.
The Series A Warrant has a cashless exercise provision provides that no effective registration statement exists and a beneficial ownership
limitation of 4.99% which may be increased or decreased up to 9.99%, provided that any such increase will not be effective until the
61st day after delivery of a notice to us of such increase.
Pursuant
to a Series B Warrant, issued by the Company in favor of the Investor, the investor shall have the right to purchase 2,000,000 shares
of the Company’s common stock at an exercise price of $17.50 per share. The Series B Warrant expires in 2 years. The Series B Warrant
has a cashless exercise provision provides that no effective registration statement exists and a beneficial ownership limitation of 4.99%
which may be increased or decreased up to 9.99%, provided that any such increase will not be effective until the 61st day after delivery
of a notice to us of such increase. The Series B Warrant is only exercisable to the extent that the indebtedness owing under the Convertible
Note is redeemed. For every share of common stock issuable upon conversion of the redemption amount on the Convertible Note, one warrant
share will vest and be eligible for exercise.
On
July 13, 2021, the Purchaser consented to the Pledge entered into with Gameday Group Plc as described under the header “Entry
into a Securities Purchase Agreement with Gameday Group Plc”, waived the provisions of Section 14(c) of the Note prohibiting
the Pledge, and agreed that the lien represented by the Pledge shall constitute a “Permitted Lien” for purposes of Section
31(uu) of the Note.
Entry
into a Securities Purchase Agreement with Gameday Group Plc
On
May 25, 2021 (the “Signing Date”), we entered into a Share Sale and Purchase Agreement with Gameday Group Plc, a limited
liability company incorporated in Malta (the “Seller”, and together with the Company, the “Parties”).
Subject to the terms and conditions of the Purchase Agreement, the Parties agreed that the Shares (as defined below) will be sold by
the Seller to the Company five Business Days after the issuance of the Seller’s Pre-Closing Restructuring Confirmation (as defined
below), or such other date as the Parties may agree on writing (the “Closing Date”). All defined terms used herein
and not otherwise defined have the meanings set forth in the Purchase Agreement.
According
to the Purchase Agreement, the Seller owns certain business assets (the “Assets”) regarding the Bethard, Fastbet and
Betive brands (the “Business”), including (i) the brand name Bethard (and, together with the Fastbet and Betive brands
the “Brands”); (ii) domains relating to the Brands (the “Domains”); (iii) the customer databases
relating to the Brands (the “Customer Databases”); (iv) website content, materials and code pertaining to the Domains
(or any part/s thereof) currently owned by the Seller and any of its Affiliates (the “Front-End Code”); (v) certain
licensee rights under an ambassador agreement originally entered into by Bethard Group Limited (“BG”) and Unknown
AB (“Unknown”), dated February 14, 2018 (and amended on February 26, 2018 and on March 16, 2018), and thereafter assigned
and novated by BG to Together Gaming Solutions p.l.c (“TGS”) on April 30, 2019 and subsequently amended on March 27,
2020 (the “Zlatan Agreement”); and (vi) B2C online gambling licenses in Sweden, Spain, Malta, and Ireland (each a
“License” and together the “Licenses”).
As
described in the Purchase Agreement, Prozone Limited, a limited liability company incorporated in Malta (“Prozone”)
prior to the completion of all actions and the transactions (including the Transaction defined below) required to take place at the Closing
on the Closing Date (the “Closing”) intends to enter into (i) an asset transfer agreement with the Seller’s
subsidiaries, BG and TGS (the “Asset Transfer Agreements”), pursuant to which Prozone will acquire, prior to the Closing,
full legal title and ownership of the Assets (with the exception of the Licenses and the Zlatan Agreement) owned by each of BG and TGS,
free and clear from any Encumbrances; (ii) a white label platform licensing agreement with TGS for the Together Gaming Platform (the
“Platform”) (the “White Label Agreement”) regarding the Business; (iii) a turnkey platform licensing
agreement with the TGS for the Platform (the “Turnkey Agreement”); and (iv) a services agreement with BG for operational
support services (the “Services Agreement”) (the “Pre-Closing Restructuring”).
Following
the Closing, the Seller agreed to procure that each of the Licenses are transferred to Prozone as soon as practicable, subject to such
transfers being permitted under the relevant local regulations. Prozone agreed to operate for a minimum period of 24 months from the
Closing the Domains utilizing the Platform, pursuant to the terms of the White Label Agreement and/or the Turnkey Agreement. After 24
months from the Closing have passed, Prozone shall be free to terminate the White Label Agreement and/or Turnkey Agreement (as applicable)
and migrate the Domains and the Customer Databases to another platform of Prozone’s choice. The Seller agreed to procure that the
Zlatan Agreement (which is currently the subject of negotiation between TGS and Unknown) will be assigned and novated in favor of Prozone
pursuant to an assignment and novation agreement to be entered into between TGS, Unknown, and Prozone (the “Zlatan Agreement
Assignment”).
Following
the Pre-Closing Restructuring but prior to the Closing, the Seller intends to assume Prozone’s payment obligations to BG and TGS
under the Asset Transfer Agreements in consideration for receivables (of an aggregate amount that is equal to those payment obligations)
due by Prozone to the Seller in accordance with an assignment and novation agreement to be entered into between Prozone, the Seller,
and BG and an assignment and novation agreement to be entered into between Prozone, the Seller, and TGS (the “Assignment and
Novation Agreements”). These receivables will then be capitalized (i.e., converted into shares in Prozone) and at which point
Prozone is expected to have an issued share capital of the EUR 25,101,200 divided into 25,101,200 shares of EUR 1 each (the “Shares”),
all of which will be owned by the Seller. The Parties intend that following the increase in the issued share capital of Prozone, the
Seller will sell all of the Shares together with all rights attached to them and free from any Encumbrance to the Company (the “Transaction”)
on the Closing Date subject to the terms and conditions of the Purchase Agreement.
The
Purchase Price for the Shares shall be an amount corresponding to the aggregate of (i) EUR 16,000,000 (the “Closing Payment”);
(ii) the additional consideration payable to the Seller by the Company as set out in Section 5 of the Purchase agreement (the “Additional
Payment”); and (iii) the shares of the Company’s common stock, par value $0.001 to be allotted and issued to the Seller
by the second year anniversary of the Closing Date, representing an aggregate value of the USD Currency Equivalent of EUR7,600,000 as
set out in Section 6 of the Purchase Agreement or such lower amount as may be applicable in accordance with Section 9.3 of the Purchase
Agreement (the “Share Consideration”, and together with the Closing Payment and the Additional Payment, the “Purchase
Price”).
On
July 13, 2021, the Company and the Seller entered into an Amendment Agreement (the “Amendment”) with respect to the
Purchase Agreement, pursuant to which the Seller and the Company agreed to amended the Purchase Agreement, specifically the Purchase
Price, as follows: (i) the Company agreed to make a payment of EUR 12,000,000 (the “First Payment”) to the Seller
by no later than July 13, 2021 (the “First Payment Date”) and a payment of EUR 4,000,000 (the “Second Payment”)
to the Seller by no later than October 1, 2021 (the “Second Payment Date”); (ii) the Company agreed to pay Seller
an additional EUR 1,000,000 on the First Payment Date, representing a refund to the Seller of an equivalent amount that the Seller has
deposited with the Spanish Gaming Authority (DGOJ) as a guarantee for regulatory purposes (the “Spanish Deposit Amount”).
Further, the Additional Payment, shall be increased from 12% of the Net Gaming Revenue during Relevant Period, effective July 1 2021,
to 15% of Net Gaming Revenue until receipt of the Second Payment, following which it shall be reduced to 12% of Net Gaming Revenue for
the remainder of the Relevant Period.
The
Additional Payment shall be reduced to 10% of Net Gaming Revenue in respect of any relevant jurisdiction where the Company has not yet
acquired the relevant B2C online gambling license for a three month period beginning July 31, 2021 but shall increase to 12% for the
remainder of the Relevant Period once the relevant license has been acquired by the Company.
On
July 13, 2021, the Company and the Seller entered into that certain Pledge of Shares Agreement (the “Pledge Agreement”),
whereby the Company agreed to pledge the Shares in favor of the Seller (the “Pledge”) as security for the Company’s
obligation to make the Second Payment by no later than the Second Payment Date, including any and all fees and/or expenses which the
Seller may incur in the protection or enforcement of its respective rights under the Purchase Agreement (the “Secured Obligations”).
The Pledge will be released by the Seller upon receipt by the Seller of the Second Payment. The Pledge Agreement constitutes a continuing
security for the due and punctual performance of all the Secured Obligations. The Pledge Agreement contains customary representations,
warranties and covenants, and other terms and conditions.
On
July 13, 2021, the Company and Seller, having met all conditions precedent in the Amendment consummated the closing for the Shares. Pursuant
to the Amendment, as consideration for the Shares, the Company paid the Seller EUR 12,000,000 at the Closing with the Second Payment
and Additional Consideration to follow in accordance with the Amendment.
Helix
Holdings, LLC Purchase Agreement
On
January 22, 2021, the Company entered into an equity purchase agreement (the “Helix Purchase Agreement”), by and among the
Company, Helix Holdings, LLC, a limited liability company incorporated under the laws of Delaware (“Helix”), and the equity
holders of Helix (the “Helix Equity Holders”), whereby the Company will acquire from the Helix Equity Holders all of the
issued and outstanding membership units of Helix (the “Helix Units”), making Helix a wholly owned subsidiary of the Company.
In
connection with the negotiation of the Helix Purchase Agreement, the Company advanced an aggregate of $400,000 to Helix during 2020 and
2021 in the form of loans (the “Helix Loans”). Upon execution of the Helix Purchase Agreement, the Company paid Helix an
additional $400,000 to be used for operating expenses pending the Closing (the “Operating Expense Payments”).
On
May 21, 2021, the Company and Helix amended the Helix Purchase Agreement pursuant to Amendment No. 1 to Equity Purchase Agreement (the
“Helix Amendment”) to, among other things, (A) update Exhibit A thereto,(B) provide for an additional indemnifiable event
by the Helix Equity Holders under Section 10.02 of the Helix Purchase Agreement with respect to post-closing pre-mature departures of
certain key employees of Helix, (C) extend the End Date (as defined in the Helix Purchase Agreement) to June 3, 2021, (D) provide for
a non-refundable operating expense payment to Helix in the amount of $100,000; provided, however, that if the transaction does not close
on or before June 1, 2021, the Company is required to make an additional non-refundable payment in the amount of $100,000 to Helix, (E)
increase the amount of the Purchase Price (as defined in the Helix Purchase Agreement) to be paid in cash from $8,500,000 to $10,000,000
and reduce the amount of the Purchase Price to be paid in stock from $8,500,000 to $7,000,000, and (F) change the Stock Payment (as defined
in the Helix Purchase Agreement) calculation from a variable formula to a fixed price formula, resulting in $7,000,000 of the Purchase
Price being payable to the Helix Equity Holders in shares of the Company’s common stock valued at $13.25 per share ( 528,302 shares).
On
June 1, 2021, the Company, Helix and the Helix Equity Holders, having met all conditions precedent in the Helix Purchase Agreement, consummated
the closing for the Helix Interests (the “Helix Closing”). Pursuant to the Helix Purchase Agreement, as consideration for
the Helix Interests, the Company paid the Helix Equity Holders at the Helix Closing: (i) $10,000,000 in cash (the “Helix Cash Consideration”)
and $7,000,000 in stock (the “Helix Stock Consideration”) through the issuance of 528,302 shares of the Company’s common
stock, par value $0.001 per share, determined using a price of $13.25 per share (the actual closing price of the Company’s common
stock on June 1, 2021 was $11.17 per share). In connection with the Helix Cash Consideration, the Company received credit for certain
loans and operating expense payments made by the Company to Helix during 2020 and 2021.
ggCIRCUIT
LLC Purchase Agreement
On
January 22, 2021, the Company entered into the GGC Purchase Agreement whereby the Company will acquire from the GGC Equity Holders all
of the issued and outstanding membership units of GGC (the “GGC Units”), making GGC a wholly owned subsidiary of the Company.
In
connection with the negotiation of the GGC Purchase Agreement, the Company advanced an aggregate of $600,000 to GGC during 2020 and 2021
in the form of loans (the “GGC Loans”). Upon execution of the GGC Purchase Agreement, the Company paid GGC an additional
$600,000 to be used for operating expenses pending the Closing (the “Operating Expense Payments”).
On
May 21, 2021, the Company and GGC amended the GGC Purchase Agreement pursuant to the Amendment No. 1 to Equity Purchase Agreement (the
“GGC Amendment”) to, among other things, (A) update Exhibit A thereto, (B) provide for an additional indemnifiable event
by the GGC Equity Holders under Section 10.02 of the GGC Purchase Agreement with respect to post-closing pre-mature departures of certain
key employees of GGC, (C) extend the End Date (as defined in the GGC Purchase Agreement) to June 3, 2021, (D) provide for a non-refundable
operating expense payment to GGC in the amount of $100,000; provided, however, that if the transaction does not close on or before June
1, 2021, the Company is required to make an additional non-refundable payment in the amount of $100,000 to GGC, (E) increase the amount
of the Purchase Price (as defined in the GGC Purchase Agreement) to be paid in cash from $13,000,000 to $15,000,000 and reduce the amount
of the Purchase Price to be paid in stock from $13,000,000 to $11,000,000, and (F) change the Stock Payment (as defined in the GGC Purchase
Agreement) calculation from a variable formula to a fixed price formula, resulting in $11,000,000 of the Purchase Price being payable
to the GGC Equity Holders in shares of the Company’s common stock valued at $13.25 per share ( 830,189 shares).
On
June 1, 2021, the Company, GGC and the GGC Equity Holders, having met all conditions precedent in the GGC Purchase Agreement, consummated
the closing for the GGC Interests (the “GGC Closing”). Pursuant to the GGC Purchase Agreement, as consideration for the GGC
Interests, the Company paid the GGC Equity Holders at the GGC Closing: (i) $15,000,000 in cash (the “GGC Cash Consideration”)
and $11,000,000 in stock (the “GGC Stock Consideration”) through the issuance of 830,189 shares of the Company’s common
stock, par value $0.001 per share, valued at $13.25 per share. In connection with the GGC Cash Consideration, the Company received credit
for certain loans and operating expense payments made by the Company to GGC during 2020 and 2021.
Competition
/ Competitive Advantages / Operations Strengths
The
online gambling and wagering industry is increasingly competitive. With relatively low barriers to entry, new competitors are entering
the esports wagering and video game tournament segments. In both of these segments, there currently exist several major competitors.
Most of EEG’s current competitors, including Unikrn, bet365, William Hill, Betway, and Pinnacle Sports, have far greater resources
than us.
However,
we believe the following strengths position us for sustainable growth:
Management
Team and Key Personnel Experience: EEG’s Board includes senior managers with extensive experience in online gambling, esports,
information technology, compliance, regulation, accounting and finance. EEG’s Officers and management include individuals with
extensive experience in online gambling, esports, information technology, marketing, business development, payment processing, compliance,
regulation, accounting, finance and customer service.
Unique
Positioning within Digital Gaming: EEG is the only digital gaming company with an esports-first focus and only digital gaming
company with full esports businesses; leading the effort to broaden legislation for betting on esports competitions. We are uniquely
focused on connecting to customers across a broad set of retail and digital businesses to achieve greater revenue, scale, and profitability,
as well as shaping esports infrastructure to facilitate omni-channel betting.
Top
Tier Technology Assets:
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EEG
has acquired businesses with state-of-the-art B2B/B2C technologies across esports competition infrastructure, for in-person
and internet-based competitions, for tournaments, esports wagering and skill-based betting (P2P).
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Acquiring
Genji Analytics, an established esports analytics provider for game publishers and esports leagues, will allow for reorientation
towards betting, through provision of customized marketing, better betting lines and greater customer retention.
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ggCircuit
Proprietary Platform: ggCircuit’s ggLeap cloud-based management software solution enables Gaming Centers to run games
through the stat integrated client, reward gamers for playing the games they love, as well as run their own local tournaments. ggCircuit
is currently used by over 600 LAN centers and connects with over 2 million gamers monthly. In the future EEG plan to offer products
such as player-vs-player betting to the gamers on the network.
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Lucky
Dino’s online casino platform - included in the acquisition of Lucky Dino was iDefix, a modern online casino platform
licensed in Malta, upon which the Lucky Dino’s online casino brands operate on . iDefix provides a full technical solution
for casino operations, with various management tools as well as in-depth business intelligence reporting and analysis. The technology
is built on a scalable event-driven micro-services-based architecture offering advanced automation features including AML compliance
and KYC handling, Responsible Gambling management and monitoring, fraud and bonus abuse detection, as well as Gamification, CRM and
bonus management.
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Argyll’s
proprietary sports betting rewards and bonus efficiency technology, provides and industry-leading customer loyalty program, driving
above industry customer retention rates and player lifetime values. The Program helped earn Argyll the Innovative Start-up of the
Year award and the 2018 EGR Marketing & Innovation Awards, and will be able to be leveraged across all of EEG’s verticals.
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Argyll’s
technology and Lucky Dino’s full igaming tech stack will accelerate the development of EEG’s new Vie esports-centric
platform, and generate synergies from further digital gaming acquisitions.
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Strong
Brand Partnerships: EEG has already partnered, via “affiliate Marketing Agreements’’, with ten leading brands
in pro sports, including Football, Hockey, Basketball and Soccer, with an aggregate fanbase of over 50 million, as well as with
several individual social media influencers.
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Pro
sports team partnerships lever huge customer databases for esports tournament participation and betting, lowering EEGs customer acquisition
costs.
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As
a “Marketing Affiliate’’, the esports team will provide their fans with a link to EEG’s online tournament
platform (EGL), where the fan can enter tournaments to win team merchandise, and subscribe to subsequent tournaments.
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Helix
LAN Center Expertise: Our Helix team prides themselves on building LAN Centers in an efficient manner and programming the centers
to engage local communities. This programming (community tournaments, after-school camps, pro-team watch parties) is what drives traffic
to these centers on a day-in day-out basis. Because of the team’s expertise in this area, we have been approached by numerous entities
such as universities, theme parks and pro sports teams to build and manage centers on their properties.
Growth
Strategy
In
the future, we intend to:
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expand
its Esports services into more of the 41 states where skill-based gambling is legal, enhance the Product offering, as well as create
relationships with players that will migrate into their Vie.gg real-money wagering platform.
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expand
its Esports Wagering services into more jurisdictions, utilizing the recently acquired MGA gaming license, which provides opportunity
for access into over 180 countries, as well as the recent multi-year partnership with Twin River Worldwide Holdings, Inc (NYSE: TRWH),
now Bally’s Corporation (NYSE: BALY), to launch our proprietary mobile sports betting product in the state of New Jersey.
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continue
with our M&A strategy in the iGaming and Traditional Sports Betting space, to acquire profitable Operators in different jurisdictions,
that will also allow for cross-pollination of services (Sportsbook, Casino and Esports).
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Future
Products and Services:
Online
Esports Tournament Play
EEG
intends to offer players from around the world, including the United States (except in 13 states in the US and other jurisdictions outside
the US which currently prohibit playing games of skill for cash prizes), the ability to enter and participate in online video game tournaments
and win cash prizes, via our enhanced EGL Tournament platform. Online esports tournament play consists of two or more people playing
against each other in a game from their personal phones or computers, where such players do not necessarily have to be playing in real
time. These events could be held over the course of a day, a week or even a month and the winner will be the one with the top score or
the fastest time at the conclusion of the event. Cash-based tournaments involving games of skill are not considered gambling in most
U.S. states because the generally accepted definition of gambling involves three specific things: (1) the award of a prize, (2) paid-in
consideration (meaning entrants pay to compete) and (3) an outcome determined on the basis of chance. As a result, games of skill are
not generally subject to the same laws and regulations as our esports event wagering service. We expect participants in our tournaments
being able to enter and play against each other with prize money distributed to the last remaining competitors. We anticipate collecting
a tournament entry fee for our tournaments, as well as a percentage of total winnings that are paid to users (typically 10% of the entry
fees) and thus none of their money will be at risk or otherwise dependent on the outcome. We intend to offer users a wide selection of
video games of skill to be played online for real money in small groups to major tournaments. The tournament platform will also serve
as a tool to help them determine which markets they are finding the most esports players. we believe using the tournament platform to
penetrate the US market will allow us to grow our brand within the esports community and lead to lower customer-acquisition-costs for
their wagering platform.
International
Market Expansion
EEG
received a Gaming Service License for online betting from the Malta Gaming Authority in April 2020, established a brick and mortar office
in such jurisdiction and commenced online gaming operations in that jurisdiction in February 2021, both on the Vie.gg and Argyll Brands.
The Lucky Dino and Bethard brand acquisitions added additional Spanish and Swedish licenses, together with UK and Irish licenses that
Argyll already operates under. In the future, EEG may consider obtaining additional country specific gaming licenses should we determine
there is sufficient local demand for their services in these markets. In order to effectively penetrate international markets, we intend
to translate our website into several additional languages and offer customer service and technical support in the local language of
key markets.
EEG’s
Online Wagering Platforms
According
to Zion Market Research’s, Online Gambling & Betting Market by Game Form (Poker, Casino, Sports Betting, Bingo, Lottery, Horse
Racing Betting, and Others) and by Component (Hardware, Software, and Service): Global Industry Perspective, Comprehensive Analysis and
Forecast, 2017 – 2024, the online gambling market represents one of the fastest growing segments of the gambling industry. Zion
Market estimated the size of the global online gambling market in 2018 was in excess of US$45.8 billion and is projected to reach US$94.4
billion by 2024.
Although
the Vie.gg brand is focused solely on offering online wagering on the widest range of esports events broadcast from around the world,
the acquisition of Lucky Dino included the acquisition of iDefix, a modern online casino platform licensed in Malta, that the Lucky Dino
online casino brands operate on iDefix provides a full technical solution for casino operations, with various management
tools as well as in-depth business intelligence reporting and analysis. The Argyll and Bethard Brands offer online users traditional
casino style games such as roulette, blackjack , or slots, as well as offering online wagering on traditional sporting events
such as soccer, horse racing and football.
On
the Vie.gg esports-focused wagering platform, a player can place a bet on a team participating in any number of tournaments which are
scheduled to be held in the upcoming weeks. They also maintain a “how to play” section on the website which provides players
with instructional videos on placing bets as well as other pieces of information that may be beneficial to an inexperienced player or
a new user of our website. Additionally, we maintain a “frequently asked questions” section which provides customers with
the ability to easily navigate general questions relating to the website, personal account information, payment processing, betting rules
and procedures as well as tips.
Marketing
and Sales Initiatives
The
Company has several sponsorship marketing agreements in place for its website as well as an extended marketing agreement with Dignitas,
an esports brand owned by Harris Blitzer sports and entertainment with multiple professional teams playing several titles with over a
million fans worldwide. The Company also has an agreement with Allied Esports to run esports tournaments to promote the brand globally
to esports fans.
EEG
is looking to expand into new geographic territories by obtaining licenses to operate in those territories. The need for hands-on implementation
in these territories and support will require investment in additional marketing activities, offices, and other overhead.
We
will also accelerate our expansion if we find complementary businesses that they are able to acquire in other markets. Marketing efforts
to expand into new territories have included esports team and tournament sponsorship, affiliate marketing, social media advertising,
content creation, and attendance at esports and gaming events in addition to personal contact with other industry leaders.
Esports
games are played by professional teams, amateur teams, and individuals. Professional esports teams have their own social media presence,
with some of the top professional teams having millions of fans who follow and interact with the team on a regular basis. A website of
a professional esports team usually contains specific information about the team and lists upcoming tournaments or events in which the
team will be participating. As part of EEG’s efforts to market our online gaming services, we are entering into affiliate marketing
agreements with professional Esports teams.
As
a marketing affiliate, an esports team will promote our brand in the content they create and on their social media and through their
Website.
We
plan to increase marketing efforts and awareness of our websites, www.vie.gg, www.sportnation.bet, www.luckydino.com
and www.bethard.com , as well as future offerings by:
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Educating
sports betting consumers to bet on esports in an effort to convert gamers to start betting on esports.
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Sponsoring
professional esports teams and tournaments that have a global reach.
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Working
with sports and gaming celebrities and social media influencers who have an interest in video games and esports to generate new customers.
EEG intends to increase its efforts in attracting esports players and other celebrities who have an interest in video games
and esports.
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Using
a multichannel approach focused on acquiring and retaining customers we intend to utilize multiple social media platforms to promote
our wagering business including, but not limited to, Facebook Twitter, Instagram, Snapchat, TikTok, Youtube, Twitch, Whatsapp, QQ,
WeChat, email and SMS messages and using online advertisements, paid search optimization, and various social media campaigns to increase
our online presence and drive traffic to our website. EEG intends to increase its investments in online advertisements, including
esports gambling-related websites. We also intend to continue to invest in optimizing the Company’s website so it will
attain a high ranking under key search words or phrases, such as “esports gambling.”
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Regulations
Affecting our Business
The
offering and operation of online real-money gambling platforms and related software and solutions is subject to extensive regulation
and approval by various national, federal, state, provincial, tribal and foreign agencies (collectively, “gaming authorities”).
Gambling laws require EEG to obtain licenses or findings of suitability from gaming authorities for EEG, including each of our subsidiaries
engaged in these activities, and certain of our directors, officers, employees and in some instances, significant shareholders (typically
beneficial owners of more than 5% of a company’s outstanding equity). The criteria used by gambling authorities to make determinations
as to qualification and suitability of an applicant varies among jurisdictions, but generally require the submission of detailed personal
and financial information followed by a thorough and sometimes lengthy investigation. Gaming authorities have broad discretion in determining
whether an applicant qualifies for licensing or should be found suitable. Gambling authorities generally look to the following criteria
when determining to grant a license or finding of suitability, including (i) the financial stability, integrity and responsibility of
the applicant, (ii) the quality and security of the applicant’s online real-money platform and gaming equipment and related software,
as applicable, and (iii) the past history of the applicant. Gambling authorities may, subject to certain administrative proceeding requirements,
(i) deny an application, or limit, condition, restrict, revoke or suspend any license, registration, finding of suitability or approval,
and (ii) fine any person licensed, registered or found suitable or approved. Notwithstanding the foregoing, some jurisdictions explicitly
prohibit gaming in all or certain forms and we will not market our gambling services in these jurisdictions. If any director, officer
or employee of EEG fails to qualify for a license or is found unsuitable (including due to the failure to submit the required documentation)
by a gaming authority, EEG may deem it necessary, or be required to, sever its relationship with such person, which may include terminating
the employment of any such person. Gambling authorities have the right to investigate any individual or entity having a material relationship
with EEG, to determine whether such individual or entity is suitable or should be licensed to do business as a business associate of
ours. In addition, certain gambling authorities monitor the activities of the entities they regulate both in their respective jurisdiction
and in other jurisdictions to ensure that these entities are in compliance with local standards on a worldwide basis.
On
May 14, 2018, the Supreme Court of the United States struck down the Professional and Amateur Sports Protection Act, a 1992 law that
barred state-authorized sports gambling with some exceptions and made Nevada the only state where a person could wager on the results
of a single game. Since the Supreme Court’s decision, sports gambling has commenced in several states and several more states have
enabling legislation pending. We believe that the Supreme Court’s decision will allow our platform to be used in the United States
at some point in the future. We plan to explore expansion of our esports online wagering platform into the US market place at the appropriate
time.
The
Unlawful Internet Gambling Enforcement Act of 2006 (“UIEGA”) made it a federal offense, punishable by up to five years in
prison, for a business to accept payments “in connection with the participation of another person in unlawful internet gambling.”
In support of such new prohibitions, the UIGEA uses a variety of terms — some of which are ambiguous or undefined. Initially, the
UIGEA broadly defines a “bet or wager” as: the staking or risking by any person of something of value upon the outcome of
a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person
will receive something of value in the event of a certain outcome.
Further,
a “bet or wager” specifically includes a chance on a lottery or prize awarded predominantly by chance; a “scheme”
as defined in Title 28, U.S.C. § 3702 relating to government-sponsored amateur or professional sports betting and, “any instructions
or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from, an account with the business
of betting or wagering.” While this final prohibition incorporates the term “business of betting or wagering,” that
term is not specifically defined anywhere in the UIGEA. The only reference to that term comes in § 5362(2), which states: The term
“business of betting or wagering” does not include the activities of a financial transaction provider, or any interactive
computer service or telecommunications service.
Nonetheless,
the law does contain specific prohibitions. In order to establish a violation of the UIGEA, it must be shown that:
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A
“person” was engaged in the business of betting or wagering;
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That
person knowingly accepted a financial instrument or proceeds thereof; and
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3.
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That
instrument was accepted (by the person) in connection with the participation of another person in “unlawful Internet gambling.”
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In
the context of this statute “unlawful Internet gambling” is defined as follows:
To
place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet
where such bet or wager is unlawful under any applicable Federal or State law in the state or tribal lands in which the bet or wager
is initiated, received, or otherwise made.
Therefore,
the UIGEA only applies to online gambling transactions that are already prohibited by other state, federal, or tribal laws. Therefore,
in order for the financial transaction to be prohibited by § 5363 of the UIGEA, the bet or wager must be “initiated, received,
or otherwise made” in a place where such activity (the bet of wager) violates preexisting state, federal, or tribal law.
At
the current time, we are able to accept wagers on our vie.bet website from residents of over 180 jurisdictions including Canada, Japan,
and South Africa, under our MGA license. We do not accept wagers from United States residents at this time, and will not do so
until our vie.gg site is live in New Jersey in compliance with all applicable regulations, and therefore the bet or wager on our platform
is not “initiated, received, or otherwise made” in a place where such activity violates pre-existing state, federal,
or tribal law.
Great
Britain
Betting
and gaming with respect to customers in Great Britain (England, Scotland and Wales, but excluding Northern Ireland, the Channel Islands
and the Isle of Man) is regulated by the Gambling Act 2005 (the “2005 Act”). The 2005 Act established the Gambling Commission
as the regulator responsible for granting licenses to operate gambling services as well as overseeing compliance with applicable law
and regulation. In 2014, the UK Parliament passed the Gambling (Licensing and Advertising) Act 2014, which required all remote gambling
operators serving customers in Great Britain or advertising in Great Britain to obtain a license from the Gambling Commission. Our Argyll
Brands operate in the UK pursuant to remote operating licences issued by the Gambling Commission along with the separate software and
“key personnel” individual licenses. Various additional operating subsidiaries of EEG are endorsed upon the licenses and
are hence authorized to carry out the licensed activities on a so-called “umbrella” basis in addition to the “primary”
licensee. The terms of these operating licenses require that the relevant subsidiaries of EEG must source all gambling software used
in connection with British players from the holder of a gambling software licenses issued by the Gambling Commission. So long as the
applicable license fees are paid and the British licenses are not suspended, revoked or otherwise surrendered, EEG expects that the licenses
will remain valid indefinitely.
British
regulations require licensed companies to file quarterly returns as well as a more extensive “annual assurance statement”
to provide the Gambling Commission with information regarding matters such as significant changes in control systems, risk management
and governance since the last assurance statement, how the licensee is addressing gambling by problem and at-risk customers and any improvements
that the licensee plans to implement to its control systems, risk management and governance and/or its approach to addressing problem
and at-risk gambling and promoting socially responsible gambling. The Gambling Commission also subjects its licensees to periodical regulatory
compliance visits subsequent to which recommendations may be issued to the licensee.
Intellectual
Property
EEG
has not filed to register any patents, trade names or trademarks in any jurisdictions in relation to our Vie.gg brand, but we do intend
to file applications to register patents, tradenames or trademarks in the near future.
Argyll
owns a European Union registered trade mark for its SportNation brand.
EEG’s
Risks and Challenges
An
investment in EEG’s securities involves a high degree of risk. You should carefully consider the risks summarized below. The risks
are discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary.
These risks include, but are not limited to, the following:
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We
are a development stage company with a limited operating history.
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The
gaming and interactive entertainment industries are intensely competitive. Esports faces competition from a growing number of companies
and, if Esports is unable to compete effectively, its business could be negatively impacted.
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They
have a history of accumulated deficits, recurring losses and negative cash flows from operating activities. We may be unable to achieve
or sustain profitability
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The
failure to enforce and maintain our intellectual property rights could enable others to use trademarks used by their business which
could adversely affect the value of the Company.
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The
Company may be subject to claims of intellectual property infringement or invalidity and adverse outcomes of litigation could unfavorably
affect its operating results.
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Compromises
of the Company’s systems or unauthorized access to confidential information or EEG’s customers’ personal information
could materially harm EEG’s reputation and business.
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There
is a risk that the Company’s network systems will be unable to meet the growing demand for its online products.
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Systems,
network or telecommunications failures or cyber-attacks may disrupt the Company’s business and have an adverse effect on EEG’s
results of operations.
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Malfunctions
of third-party communications infrastructure, hardware and software expose Esports to a variety of risks Esports cannot control.
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