In a somewhat convoluted transaction, GMS is using Majesco’s stake in the venture to purchase all of the assets of Isle of Man-based Orid Media Ltd., of which Pariplay is a wholly owned subsidiary. Orid designs and develops both fixed odds and random odds online and mobile games for real money online game sites, social casinos and lottery systems. Pariplay will continue operating under GMS ownership. Based on how well GMS and Pariplay perform, Majesco could be obligated to pay an additional $1 million into the venture. In a further twist, ICQ co-founder Yair Goldfinger, an investor in Orid and Pariplay, is purchasing 3.3 million shares of Majesco common stock at a price of $0.60 per share ($1.98 million) as part of a direct offering. Majesco CEO Jesse Sutton will serve as chairman of GMS. The venture is contingent on gambling license approval by the Isle of Man authorities.
Real money gambling definitely has its allure as a revenue generator. Perhaps the biggest challenge is that to operate in the U.S. requires a daunting set of regulatory hoops to jump through. But Majesco’s goals for GMS don’t appear to be as a gambling destination. According to statements made by Majesco CFO Michael Vesey to the Star Ledger in New Jersey, the intent is to operate as a provider of online and mobile gambling content and the network infrastructure to support both: “We’re going to register for a license and if someone was licensed in New Jersey and operated a casino, we could provide content services to them,” Vesey said.
In New Jersey where Majesco is based, any vendor doing business with casinos in the state must be registered with the New Jersey Division of Gaming Enforcement. Vesey believes those casinos now facing the transition into Internet gaming are going to require partners with expertise – expertise that GMS can provide. Working behind the scenes as a provider of online gambling services can have advantages for a company that makes its primary business in family and casual video games. Then again, there is always the possibility that Majesco could work its way into the skill game-based content segment that launched King into its current Facebook dominance. Even a slice of that pie could be enormously attractive to a small player like Majesco. So we see the strategic sense behind the publisher’s GMS venture. The challenge is that there are many companies already established in real money online gambling, and more flooding in every year. Where Majesco might help GMS stand above the rest is the company’s long history of content licensing and distribution. That kind of experience could give Sutton an edge in negotiating with casinos as a digital gambling services provider.