M Life Rewards

MGM sued by GAN over alleged patent infringement involving loyalty program

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GAN, a B2B supplier of iGaming software, on Monday filed a lawsuit against MGM Resorts International alleging its system for communicating loyalty credit information between its M Life Rewards casino program and the BetMGM online gaming service infringes a GAN Ltd. patent.

The complaint was filed in the U.S. District Court for the District of Delaware, Bloomberg Law reports. The patent covers technologies connecting an Internet-based gaming system with a land-based casino management system to determine whether a patron’s online gaming account loyalty credits are transferable to the land-based system, the suit says. If they are, it then transmits the credits. The cited news agency estimates the patent will expire in August 2033.

In a press release Tuesday to announce the fourth quarter and full-year results for 2021, Dermot Smurfit, CEO of GAN stated: "We recently took considered legal action to defend our patented intellectual property to ensure that it remains both protected and monetized. We believe our patents are enforceable and we are prepared to take a more proactive approach going forward."

GAN’s proprietary internet gaming enterprise software system is called GameSTACK. The company licenses it to land-based casino operators as a turnkey technology solution for regulated real-money and social online gaming.

GAN claims that MGM has known of the patent since at least as early as 2016, when the parties discussed “a contemplated business relationship” involving “GAN’s online gaming software-as-a-service solutions.” It’s seeking damages of at least a reasonable royalty in an amount to be determined at trial.

On February 1, MGM Resorts officially introduced MGM Rewards, its new loyalty rewards program, which for the first time is connected to the company's online sports betting app BetMGM, and also allows non-gaming members to join their gaming counterparts and earn a currency, MGM Rewards Points, redeemable for complimentary dining, entertainment, hotel stays, among other benefits. 

GAN's financial results

On Tuesday, GAN reported total revenue of $125.4 million in full year 2021, a 257% increase driven by the acquisition of Coolbet and to lesser extent strong growth in the B2B segment. However, higher operating costs of this acquisition also led to net loss of $24.9 million versus net loss of $20.2 million in the prior year. 

In the fourth quarter, the company saw total revenue of $30.5 million, slightly down from $32.3 million in the prior quarter. The decrease was driven by "abnormally low" sports hold in the quarter. Gross profit of $19.0 million, versus $21.5 million, decreased primarily due to the decline in sports margin within the company’s B2C segment during the fourth quarter.

"Our fourth quarter financial results were adversely affected by the volatile sports margin in our B2C segment consistent with other International operators, which was partially offset by continued strong new customer growth," Dermot Smurfit, CEO of GAN stated in a press release. "However, our fourth quarter was highlighted by strategically important wins for GAN along with new state launches for clients such as FanDuel in Connecticut and our entrance into Ontario when iGaming and online sports betting officially goes live. We also completed the successful acquisition of Silverback Gaming to further grow our SuperRGS portfolio of original content. We have not lost sight of the fact that we delivered incredibly strong revenue growth in 2021, made numerous strategic steps toward solidifying our future, and are projecting another year of very strong revenue growth as well as much improved profitability as we achieve better scale."

"Recent sports wins such as Red Rock Resorts and SuperRGS wins like Entain are demonstrating the value behind the investments we are making in the business and validating the quality of our technology and exclusive content," he added. 

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