Lyle Berman, a legendary Minnesota businessman and a member of the American Gaming Association's Gaming Hall of Fame, is getting into the emerging esports gaming industry and is reuniting with one of his previous gaming businesses in his latest venture.
Casino industry veteran Lyle Berman bets on esports gaming company
Lyle Berman is using a special-purpose acquisition company to get into the esports gaming industry.
December 28, 2018 at 3:42PM
Berman, 77, a co-founder of Grand Casinos Inc., is using a special-purpose acquisition company based in Minnesota, Black Ridge Acquisition Corp., to buy two companies and form Allied Esports Entertainment.
"Esports is going to explode," Berman said. "By everybody's prediction there are more people who will be watching it [esports] in a few years than watch the NFL, NBA and baseball combined."
Black Ridge announced last week it would acquire Allied Esports International and WPT Enterprises from China-based Ourgame International Holdings. The Minneapolis company will issue about 11.6 million shares, valued at $118 million, to Ourgame, plus additional warrants and $50 million in milestone payments. The debt and equity deal is valued at $213.8 million by Thomson Reuters.
The new company will have a presence in Minneapolis but will move its headquarters to Irvine, Calif. It will have 100 employees.
"There are hundreds of millions of people who play esports on a regular basis throughout the world," Berman added. "We think that its an emerging industry that has really got incredible growth potential and we are kind of in on the ground floor."
The combined revenue for WPT and Allied Esports International will be about $35.1 million in 2019 and is expected to grow to $108 million by 2020 and $208 million by 2021, a company spokesman said.
In a conference call announcing the deal last week, the company estimated the esports industry will be an $11 billion opportunity in a few years.
Berman, a director of Black Ridge, is expected to be chairman of Allied Esports. The new company will be publicly traded and expects to be listed on Nasdaq under the stock symbol "AESE" when the deal is completed in the first quarter of 2019.
The plan is for Frank Ng, CEO of Ourgame, to become CEO of AESE.
"This transaction will be transformational for our rapidly expanding company and provide the esports community with a fully capitalized, globally connected esports enterprise capable of producing the volume and breadth of esports entertainment products the industry is increasingly demanding," Ng said in a statement.
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Investments using SPACs are typically financial in nature, but Allied Esports will be able to leverage the experience of Berman, his team, and managers coming over from Ourgame in the new company.
Grand Casino, which later became Lakes Entertainment, helped to develop Grand Casino Mille Lacs and Grand Casino Hinckley as well as casinos in Mississippi and elsewhere. Berman likens where the esports industry is today with where Indian-gambling and the emerging gaming industry was in the early to mid-1990s. In 1995, Fortune magazine named Grand Casinos the fastest-growing company in America.
In 2016, Berman's Lakes Entertainment merged with Golden Gaming to form Las Vegas-based Golden Entertainment Inc. Berman remained a director of the company and a minority shareholder but was no longer chairman or CEO.
In the new deal, Berman reunites with WPT Enterprises Inc. The company was a subsidiary of Lakes Entertainment in 2004 when Berman took it public. WPT was sold in 2009 to Peerless Media; Ourgame acquired WPT in 2015.
WPT, an online poker company, licenses its brand name to about 65 poker events each year, produces television and online programming of the World Poker Tour, and runs an online membership site, ClubWPT.
Allied Esports Entertainment, a provider of esports entertainment, will use efforts pioneered by WPT, including in-person experiences, multiplatform content creation, and interactive services to fuel its growth in the global esports industry.
Allied Esports has already made a name for itself through the development of the HyperX Esports Arena in Las Vegas. The HyperX Esports Arena is a dedicated esports venue that hosts live electronic gaming events and serves as a production facility for esports programming.
Allied Esports will also provide design, development and operations expertise as services to other companies developing esports venues.
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