Hong Kong-listed Chinese gaming operator Ourgame International Holdings has announced a strategic change of direction, with the company set to focus more energy on international expansion via a proposed merger between its Allied eSports and World Poker Tour (WPT) businesses.
The news follows a difficult year on the domestic front after a regulatory crackdown by authorities in mainland China heavily impacted Ourgame’s core domestic card and board games business, including a suspension in March 2018 on the issuing of new game permits.
As a result, Ourgame announced on Friday a loss attributable to equity holders of RMB623 million (US$92.8 million) in FY18, widened significantly from a loss of just RMB24 million (US$3.6 million) in 2017, and a 9% decline in revenue for the period to RMB343.4 million. Games revenue contributed the entirety of that decline, down 12% to RMB266.8 million.
While the company said it had been forced to streamline its China-based business units via redundancies and reduced office space, it pointed to positive momentum in its overseas eSports and poker segments as providing a clear path forward.
In particular, Ourgame referred to an agreement it signed in December that is expected to see Allied eSports and the WPT merge with a NASDAQ-listed company called Black Ridge Acquisition Corporation to form a new holding company of the Allied eSports and WPT businesses, Allied Esports Entertainment, Inc.
Ourgame purchased the WPT in 2015 for US$35 million, while eSports subsidiary Allied eSports opened its global flagship arena at MGM Luxor Casino and Hotel in Las Vegas in March 2018.
Explaining the prospects for the merged entity, which will see Ourgame remain majority shareholder, the company said it “believes the merger is a transformative transaction that elevates the Allied eSports and WPT businesses to the next level, unlocking significant value for the company and its shareholders and providing the company with access to significant cash resources to finance its continued international expansion.
“The merger with Black Ridge and listing of Allied eSports and WPT is a cumulative recognition of the company’s multi-year efforts and will lay the foundation for more and faster growth on this sector to come.”
