World Poker Tour operator to combine with esports provider in new public company
Gaming legend Lyle Berman, co-founder of Grand Casinos Inc. and a member of the American Gaming Association’s Gaming Hall of Fame, has formed a new company to take advantage of the burgeoning business in esports.
Berman formed a special-purpose acquisition company based in Minnesota, Black Ridge Acquisition Corp., to acquire World Poker Tour (WPT) Enterprises and the assets of Allied Sports International. The merged company, to be called Allied Esports Entertainment, will trade on the Nasdaq exchange under the symbol AESE.
“Esports is going to explode,” Berman said in an interview with the Minneapolis Star Tribune. “By everybody’s prediction there are more people who will be watching it in a few years than watch the NFL, NBA and baseball combined.”
Black Ridge will acquire Allied Esports International from China-based Ourgame International Holdings. The new 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.
Berman, a director of Black Ridge, is expected to be chairman of Allied Esports Entertainment. Frank Ng, CEO of Ourgame, is expected to be named CEO of AESE.
“”n more than 40 years in the gaming and entertainment business, this is the most exciting opportunity I have seen,” Berman said in a statement. “The capital from the Black Ridge SPAC will be used to expand AESE’s global property network, accelerating their first-mover advantage as the company continues to build a brand that is synonymous with esports.”
Ng added, “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.”
The new company will have a presence in Minneapolis but will move its headquarters to Irvine, California, and will initially have 100 employees, according to the Star Tribune.
“There are hundreds of millions of people who play esports on a regular basis throughout the world,” Berman said. “We think that it’s 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 2018 and is expected to grow to $108 million by 2020 and $208 million by 2021.
In a conference call announcing the deal, company officials estimated the esports industry will be an $11 billion opportunity in a few years.
With Grand Casino, which later became Lakes Entertainment, Berman was a pioneer in the Indian gaming industry, developing Grand Casino Mille Lacs and Grand Casino Hinckley as well as casinos in Mississippi and elsewhere. In 2016, Berman’s Lakes Entertainment merged with Golden Gaming to form Las Vegas-based Golden Entertainment Inc. Berman remains a director of the company and a minority shareholder.
Allied Esports is well-known in the esports sector, having developed the HyperX Esports Arena in Las Vegas. WPT, which stages the World Poker Tour, was formerly part of Lakes Entertainment. According to the report in the Star Tribune, Allied Esports Entertainment will use efforts pioneered by WPT, including in-person experiences, multi-platform content creation and interactive services to gain ground in the esports industry.
In addition to staging esports events, Allied Esports will also offer design, development and operations expertise as services to other companies developing esports venues.
