NorthStar Gaming Holdings Inc. (TSXV: BET, OTCQB: NSBBF) announced it has issued a $3.5 million unsecured promissory note to Playtech plc.
This latest financial arrangement aims to sustain the company’s growth trajectory and fund general corporate needs as NorthStar builds on its improved financial performance in 2024.
Announced through an official press release, dated December 16, 2024, NorthStar’s promissory note carries an annual interest rate of 8% and is due on April 25, 2025, unless repaid earlier through additional financing exceeding $10 million.
This marks the third financing agreement between NorthStar and Playtech this year, bringing Playtech’s total loan amount to NorthStar to $9.5 million.
Strengthening Financial Growth
NorthStar CEO Michael Moskowitz expressed optimism about the new capital, highlighting its importance in fueling the company’s continued growth.
“This injection of capital will support our growth as we continue to deliver improved financial performance, as evidenced by our strong third-quarter results in 2024,” Moskowitz stated.
In Q3 2024, NorthStar achieved significant milestones, including a 52.7% year-over-year increase in gross gaming revenue to CA$8.4 million. The platform also reported total wagers of CA$234 million, up 69.6% compared to the previous year. After bonuses and promotions, operating revenue reached CA$6.8 million, a 44.7% increase from Q3 2023.
Cost management also played a key role in NorthStar’s financial improvement. Despite increased marketing expenditures, operating costs declined by 5.2% to $5.5 million. These measures contributed to narrowing pre-tax losses to $3.1 million, a notable improvement from the $4.2 million loss reported in Q3 2023.
NorthStar Bets, a flagship platform
At the heart of NorthStar’s operations is its flagship platform, NorthStar Bets, a Canadian-born online casino and sportsbook.
Known for its premium offerings, NorthStar Bets delivers a curated selection of games, including slots and table games, tailored to the preferences of Canadian players.
The platform also features an exclusive “Sports Insights” tool, integrating real-time betting guidance, statistics, and scores. This innovation emboldens the user experience, setting NorthStar Bets apart from competitors in the iGaming market.
Another hallmark of NorthStar’s operations is its commitment to responsible gambling. The platform adheres to strict regulatory standards, ensuring a safe and transparent environment for players.
All of this comes in handy at a period in which Canadian gambling regulations are changing at an unprecedented pace, and the spotlight is directed to safe gaming features and legislation.
Promissory note
The issuance of the $3.5 million promissory note constitutes a “related party transaction” under TSX Venture Exchange Policy 5.9 and Multilateral Instrument 61-101, as Playtech plc controls over 10% of NorthStar’s voting rights.
NorthStar relied on regulatory exemptions to expedite the transaction, citing its commercial terms and urgent financial needs.
The transaction received unanimous approval from NorthStar’s independent directors. “This financing allows us to maintain our growth momentum while ensuring compliance with all regulatory requirements,” Moskowitz explained.
The partnership between NorthStar Gaming and Playtech
The latest financing follows two previous short-term loans from Playtech in April and September 2024, respectively. Together, these agreements reflect Playtech’s confidence in NorthStar’s strategic direction and growth potential.
This partnership underscores the alignment between the two companies. Playtech, a leading technology provider for the gambling industry, has played a crucial role in NorthStar’s expansion efforts.
Its financial backing has enabled NorthStar to execute its marketing strategies, launch new products, and improve operational efficiency.
But while the $3.5 million note provides much-needed capital, it also adds to NorthStar’s growing debt obligations. Playtech’s total loans to NorthStar now amount to $9.5 million, with the latest note carrying an annual interest rate of 8%.
The short-term nature of these loans presents challenges, particularly with the latest note maturing in April 2025. NorthStar must strategically manage its finances to meet repayment deadlines while continuing to invest in growth initiatives.
Q3 2024 Highlights
NorthStar’s Q3 2024 performance reflects the company’s ability to balance growth with operational efficiency, which is fundamental for the logistics behind this new financing round. The company’s gross gaming revenue reached CA$ 8.4 million, a 52.7% increase from Q3 2023.
Total wagers on the NorthStar Bets platform surged 69.6% to CA$234 million, driven by strong player engagement.
After deducting bonuses and promotions, operating revenue rose to CA$ 6.8 million, a 44.7% increase. This growth demonstrates NorthStar’s ability to attract and retain players through innovative offerings and targeted marketing campaigns.
Cost management remains a key focus for NorthStar. Despite higher marketing and administrative expenses, the company reduced its operating costs by 5.2% to CA$5.5 million in Q3 2024. This efficiency contributed to narrowing pre-tax losses to CA$3.1 million, compared to a CA$4.2 million loss in Q3 2023.
Year-to-Date results
For the first nine months of 2024, NorthStar Gaming reported gross gaming revenue of CA$24.1 million, a 56.5% increase from the same period in 2023. Total wagers rose by 54.6% to CA$ 677 million, reflecting sustained player engagement.
Operating revenue for the year-to-date reached CA$20.2 million, up 55.4%. Meanwhile, operating costs decreased by 5.3% to CA$ 21.4 million, further highlighting NorthStar’s focus on cost control.
Pre-tax losses narrowed to CA$14.3 million, a significant improvement from the CA$18 million loss reported in 2023.
Looking Ahead
NorthStar is preparing for the new year with plans to build on its recent successes and address its financial challenges. The company’s strategic focus includes securing additional funding, launching new products, and expanding its market presence.
“The marketing investments and product launches we executed in Q3 have set us up for a strong finish to the year,” Moskowitz stated. “With continued momentum and operating leverage driving improved financial results, we are highly optimistic about delivering significant shareholder value in 2025.”
NorthStar has also emphasized its commitment to responsible gambling, ensuring that its growth aligns with the highest standards of accountability and player protection.
A distinctly national perspective
As a Canadian-born company, NorthStar Gaming is uniquely positioned to cater to local players’ preferences.
NorthStar Gaming’s $3.5 million promissory note from Playtech marks a significant step in the company’s growth journey. Through this partnership and the execution of a clear strategic vision, NorthStar can be well-positioned to sustain its growth trajectory while navigating the challenges of a dynamic industry.
With a strong 2024 Q3 performance and a clear plan for the future, the company is in a position where it’s likely to strengthen its foothold in Canada’s regulated iGaming market. However, there is no way to truly predict what is going to happen during the next quarters, especially if the worldwide changes to sports betting are taken into account.
As the company looks ahead to 2025, its focus on innovation and operational efficiency will be critical to sustaining momentum and delivering value to players and shareholders.
