Atari Scraps Online Casino, Takes $6M Charge on Lost Effort

Posted on: July 6, 2021, 06:00h. 

Last updated on: July 7, 2021, 08:39h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Video game giant Atari’s foray into the world of online casinos was a brief one. The company announced Monday turning its focus to premium games and closing its casino in Africa.

In a statement released on Monday, the company said it’s shifting its focus away from free-to-play mobile games as part of its latest turnaround strategy. The company will focus on premium gaming, which is a better representation of the company, Atari CEO Wade J. Rosen said in a statement.

The strategy also includes scrapping its online casino.

In order to efficiently allocate its resources to the success of this new strategy, Atari has decided to exit its direct operations of Atari Casino in Africa,” according to a statement.

The Paris-based company said it’s taking a $5.93 million charge for the financial period ending March 31, 2021, as a result of the move. Its board of directors on July 1 approved the shift in strategy for the Atari Gaming business, the unit where the internet casino resides.

Atari revealed plans for the casino in March, noting at the time it would be developed in partnership with Decentral Games and launched on the Ethereum blockchain. That leveraged it to two hot themes – iGaming and cryptocurrency.

Atari Casino Gaming Ambitions May Be Halted

It wasn’t that long ago that the video game company known for such iconic titles as Asteroids, Centipede Missile Command, and Pong harbored casino gaming ambitions.

Before the online casino was revealed earlier this year, the company said in early 2020 it was planning a chain of luxury hotels around the world, with Las Vegas being one of the slated destinations. The hotels were to be themed after Atari video games and potentially aimed to capture some of the booming esports market.

However, the latest release on the hotels on Atari’s website is dated last October and the company doesn’t mention the hotel project in its July 5 statement. It does, however, note material changes to its free-to-play games model.

“Atari intends to shift its video game portfolio to premium games for consoles and PC. While the competitive and marketing environment is weighing on the free-to-play business model, five free-to-play games will be discontinued or sold (RCT Stories, Crystal Castles, Castles & Catapults, Ninja Golf, Atari Combat: Tank Fury),” said the company.

Still Plenty of Reasons for iGaming Optimism

While Atari is abandoning its internet casino platform, there are still plenty of reasons to be bullish on the industry’s trajectory. For example, CFRA Research said last month the North American online casinos and sports wagering market could vault to $42 billion over the next several years.

Add to that, Goldman Sachs said earlier this year online sports betting and internet casinos could jump to $39 billion and $14 billion, respectively, by 2033.

Industry analysts and executives see iGaming not only providing a long runway for growth but materially superior margins and profitability relative to both sports wagering and land-based casinos.