Marvelous Microcaps
Bragg Gaming Group Inc. (BRAG)
INTRO:
At Perritt Capital Management, we take focused positions in companies where we have a high conviction in their success; companies that are out of the mainstream of small cap investing. To highlight our process, we are pleased to present the newest installment in our ongoing series “Marvelous Microcaps – Big Ideas on Small Companies.” This series profiles companies that we believe have a niche in their existing markets or are launching a product that could disrupt their marketplace.
THE COMPANY:
Bragg Gaming Group Inc. (BRAG) operates as an iGaming content and technology solutions provider serving online and land-based gaming operators with its proprietary and exclusive content. Utilizing their own internal studio, they offer crafted casino game titles using data driven insights from in-house brands. In addition to their proprietary content portfolio, they complement their offerings with a wide cross section of exclusive titles from selected studio partners under the Powered by Bragg program. The company builds games on its own RGS technology that are distributed via the Bragg Hub content delivery platform and are available to customers. Its PAM technology powers various iCasino and sportsbook brands and is supported by in-house managed, operational, and marketing services. They have a geographic presence in the U.S., Canada, Brazil, Mexico, Peru, Belgium, Croatia, Czech Republic, Germany, Greece, Italy, Portugal, Romania, Serbia, Spain, Sweden, Switzerland, and the United Kingdom. They are based in Toronto, Canada.
WHY WE OWN: THE PERRITT ADVANTAGE
We believe that Bragg Gaming is an attractive investment opportunity in the iGaming and iCasino space. The company is going through a transition in their business, where they are harvesting the cashflows from their legacy established markets in Europe and using those assets to penetrate new markets in North America and Latin America, notably in the United States and Brazil. As the U.S. and Brazil work to liberalize their iGaming markets, Bragg is positioning themselves to take advantage of growth opportunities within these markets.
They are accomplishing this growth through a series of partnerships and acquisitions. In Brazil, they recently announced the acquisition of an equity stake in, and the signing of an exclusive content partnership with a company called RAPIDPLAY LTD, a gaming studio renowned for its localized, high-performance content tailored to the Brazilian and broader Latin American markets. In the U.S., they have recently announced a key partnership with Caesars Entertainment. This partnership elevates Bragg from being a content supplier to a technology partner where they will leverage their existing platform to help Caesars develop their own proprietary content as well as use Bragg’s content to deliver unique gaming experiences to their customers.
We believe this is a classic source of stable revenue feeding the growth vehicle story with the company’s revenue and cashflow from their European operations feeding growth in the North American and Latin American markets. As European revenues decline in certain markets due to regulatory pressures, their revenues from North America and Latin America should begin to have a material impact on the company’s bottom line. In their last report, they highlighted triple digit revenue growth in the U.S. with that market slated to be about 15% of revenues by the end of the year. This represents a material impact from a market where they did not have a presence until very recently. As regulatory hurdles around iGaming are lowered in the U.S., Brag should be able to continue to further penetrate this marketplace and grow their revenue further. We are excited about what the future has to offer for Bragg Gaming.