Ex-Coolbet CEO slams GAN over exit and “weak” business model and board

Former Coolbet CEO and current GAN shareholder Jan Svendsen has launched an explosive attack on GAN CEO Dermot Smurfit and the firm’s board of directors over his exit and the ongoing future of the business.

In a letter published on Reddit and LinkedIn, Svendsen took aim at GAN over conduct in the weeks leading up to his departure, with the former Coolbet CEO heavily criticising a lack of impetus from GAN to retain his services post acquisition.

Svendsen suggested that despite intending to stay with the firm, GAN made no overtures to integrate him into the firm and refuted all attempts to allow him to serve on the California-based supplier’s board of directors.

“I was told that a seat at the board would be a natural fit for me at GAN. However, they did not appoint me to the board and in fact told me that a seat at the board was nothing I wanted to have,” Svendsen wrote.

“After some weeks I was offered a role as an office manager in an office we planned to open in Spain.

“I took that as an insult to be honest and resigned from GAN immediately. The chairman called me and told me he was disappointed in me; I told him to take a look in the mirror,” he added.

After exiting GAN, Svendsen was required to adhere to a non-compete clause in his contract, a clause which expired in January 2022.

Svendsen continued: “It was not a big problem for me to leave GAN, it has given me an opportunity to pursue many of the great plans I have and build a new company.

“But I did feel cheated, because it seemed obvious that Dermot Smurfit never wanted to have me around. But my problem now is that I currently hold 840,000 shares at GAN and know personally that the leadership team at GAN is non-effective and the board is weak,” he concluded.

In the face of the implied ambivalence, Svendsen began an investigation of GAN, discussing the firm with many of its current employees and examining its business practices as well as looking into its M&A record post acquisition, concluding that the business has a non-effective structure.

“The group of leaders in GAN are spread all over the place. They simply don’t have an office where they meet every day and work together to make decisions together and work like a team. It’s a horrible solution and a bad way to run a big company,” Svendsen wrote.

He also highlighted actions by the board in awarding significant salaries and bonuses during 2021, despite GAN’s share price and bottom line dropping significantly in what he branded a “horrible” year for the firm.

“Regardless, the leadership team gave themselves huge bonuses. Why? Aren’t bonuses something you should pay out when you produce positive results?” Svendsen questioned.

“In my companies, we never paid any bonuses before the company was profitable, and then bonuses were linked up with monthly salaries to every employee in the company, not only for the greedy leaders and board members,” he added.

Svendsen also questioned Smurfit’s role in negotiating the acquisition and exclusive agreement with Silverback Gaming, suggesting the deal was a “very poor” one for GAN.

Coolbet was acquired by GAN for $177m in November 2020 and has since become the jewel in the crown of the suppliers operations, spurring a 257% year-on-year (YoY) revenue increase in 2021.

However, Svendsen questioned the wider industry trend of exorbitant bonusing in order to attract new sportsbook customers and the potential impact that it might have on suppliers over the longer term, once the big sportsbook operators roll back their marketing spend.

He also claimed that the valuation of GAN was “insanely low” in comparison to Coolbet, which Svendsen suggested would be as much as twice its value on a standalone basis, based on its individual performance.

“Clever developers are building the new GAN sports, which is the B2B version of the Coolbet software, that will be very good stuff and I’m confident it will be the best of its kind in the market,” Svendsen said.

“That will help GAN to take new steps in the B2B markets but using so many resources from Coolbet to clean up the GAN B2B mess also comes with a price for B2C, the growth of Coolbet is slowing down a lot, and that may not be so smart when Coolbet is the only part of GAN that is making the money.

“In the long run I don’t think B2B business will be massive, when the consolidation continues in the market the big players will want to have their own software.

“That’s why GAN should be a very hot candidate for acquisition, because there is not much effective software and knowledge out there to buy,” he added.

Concluding his letter, Svendsen refuted any suggestion that he was looking to return to the firm beyond his current shareholder identity, but called for a new board and CEO.

“It’s a company with great potential because of what Coolbet brings to the table. We need a leader who can collect the troops and who respect all the employees of the company. Someone who can keep up the quality and be more vigilant about spending money,” Svendsen added.