Toronto-based esports betting company Rivalry is set to begin licensing its gaming content to other operators, CEO Steven Salz said on an earnings call on Thursday.

Noting that the casino segment generated 60% of the firm’s betting handle and 24% of its GGR in Q2 2024, Salz said the company expects to enter a licensing agreement for its first-party casino games in the coming months to establish a new revenue stream for its B2B vertical.

“Right now, we are zeroing in on a relationship that will distribute games across the world, I would say more [in] grey markets as an aggregator-type product, and also on a potential opportunity in a very large regulated geography with an individual operator that is going to look more like an exclusive relationship…” Salz told investors.

Salz detailed that Rivalry will look to license its existing content along with a slate of yet-to-be-released games that are currently in development.

He noted that it will not be a straightforward process as, in some jurisdictions, the pivot will require Rivalry to gain gaming supplier licenses from regulators.

“A larger, call it grey-market aggregator is a little quicker and easier,” the CEO acknowledged. “The regulated market one is a little challenging because it’s not just being able to service that specific provider but also to legally be a supplier of licensed casino games within a regulated market. Specific regulators and specific markets will have slightly different specs for the licensing of casino content that can be supplied.

“It’s not operationally the easiest thing in the world to take a business that’s B2C and built original casino games for itself and then turn around and start servicing other people with that content.”

Rivalry posts record net revenue margin in mixed quarter

Salz was speaking after Rivalry posted a quarterly update in which a record quarterly net revenue margin highlighted a mixed Q2 2024 for the Canadian company.

The firm reported an all-time high net revenue margin of 62.5% of gross gaming revenue (GGR), which it said reflected its margin enhancement efforts. Overall net revenue was up 22% to $4.7 million.

However, the operator’s betting handle fell by 22% year-over-year to $87.8 million and its GGR dropped by 12% to $7.4 million. Rivalry stressed that as it has prioritized margin, betting handle can be negatively impacted as players turn over their balances less. It means that, just as in Q1, Rivalry is lagging behind where it stood this time last year.

Salz added that the results come after the company shifted its focus toward cryptocurrency expansion and VIP users. Rivalry announced in May the launch of its new Rivalry Token in some markets (excluding Ontario), which it aims to use to capture higher-value players.

“At Rivalry we have narrowed our focus primarily to two areas that are showing the highest potential for growth in our history: crypto expansion led by tokenization, and VIPs,” said Salz in the release. “Alongside these focused efforts, we are tightly managing working capital, rationalizing our teams, and cutting spend in areas that fall too far outside of these priorities. Our efforts to improve margin are also driving results, achieving record margin levels for two consecutive quarters.”

The company also said the improvements reflect ongoing initiatives to increase margins through innovation and adjustments to the product offering. In particular, executives noted its strong uptick in user activity for higher-margin product offerings including the Pre-Made Combos feature, which has driven over 500,000 wagers since its release in January 2024.