10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period _______________

Commission File Number: 001-36689

INSPIRED ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

Delaware	47-1025534
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
250 West 57th Street, Suite 415
New York, NY	10107
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (646) 565-3861

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [X]	Smaller reporting company [X]
	Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	INSE	The NASDAQ Stock Market LLC

As of May 12, 2021, there were 23,218,323 shares of the Company’s common stock issued and outstanding.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statement of Stockholders’ Deficit	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	42
ITEM 4.	CONTROLS AND PROCEDURES	43
PART II.	OTHER INFORMATION	43
ITEM 1.	LEGAL PROCEEDINGS	43
ITEM 1A.	RISK FACTORS	43
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	43
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	43
ITEM 4.	MINE SAFETY DISCLOSURES	43
ITEM 5.	OTHER INFORMATION	43
ITEM 6.	EXHIBITS	44
SIGNATURES		45

i

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

	March 31, 2021			December 31, 2020
	(Unaudited)
Assets
Cash	$	41.2		$	47.1
Accounts receivable, net		21.0			27.5
Inventory, net		17.1			17.6
Prepaid expenses and other current assets		13.3			16.8
Total current assets		92.6			109.0
Property and equipment, net		61.8			65.5
Software development costs, net		39.7			42.4
Other acquired intangible assets subject to amortization, net		7.5			7.7
Goodwill		84.7			83.7
Right of use asset		12.0			12.5
Other assets		2.7			3.3
Total assets	$	301.0		$	324.1
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable	$	21.1		$	17.9
Accrued expenses		32.1			31.4
Corporate tax and other current taxes payable		5.8			14.4
Deferred revenue, current		9.3			11.5
Operating lease liabilities		3.6			3.6
Other current liabilities		2.4			2.5
Warrant liability		16.0			13.0
Current portion of finance lease liabilities		0.9			0.6
Total current liabilities		91.2			94.9
Long-term debt		295.9			297.5
Finance lease liabilities, net of current portion		1.1			0.2
Deferred revenue, net of current portion		9.2			11.4
Derivative liability		1.1			1.7
Operating lease liabilities		8.6			9.2
Other long-term liabilities		6.3			10.9
Total liabilities		413.4			425.8
Commitments and contingencies
Stockholders’ deficit
Preferred stock; $0.0001 par value; 1,000,000 shares authorized		—			—
Common stock; $0.0001 par value; 49,000,000 shares authorized; 22,594,207 shares and 22,430,475 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		—			—
Additional paid in capital		326.0			324.6
Accumulated other comprehensive income		35.7			31.1
Accumulated deficit		(474.1	)		(457.4	)
Total stockholders’ deficit		(112.4	)		(101.7	)
Total liabilities and stockholders’ deficit	$	301.0		$	324.1

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(in millions, except share and per share data)

(Unaudited)

	Three Months Ended March 31,
	2021			2020
Revenue:
Service	$	17.1		$	42.8
Product sales		5.7			9.5
Total revenue		22.8			52.3
Cost of sales, excluding depreciation and amortization:
Cost of service		(2.1	)		(8.5	)
Cost of product sales		(3.2	)		(6.2	)
Selling, general and administrative expenses		(15.2	)		(29.0	)
Acquisition and integration related transaction expenses		(1.4	)		(3.2	)
Depreciation and amortization		(13.1	)		(12.6	)
Net operating loss		(12.2	)		(7.2	)
Other expense
Interest income		—			0.3
Interest expense		(8.6	)		(6.1	)
Change in fair value of warrant liability		(3.0	)		7.6
Loss from equity method investee		—			(0.5	)
Other finance income (expense)		6.4			(3.7	)
Total other expense, net		(5.2	)		(2.4	)
Loss before income taxes		(17.4	)		(9.6	)
Income tax benefit (expense)		0.7			(0.2	)
Net loss		(16.7	)		(9.8	)
Other comprehensive income/(loss):
Foreign currency translation (loss) gain		(1.1	)		3.1
Change in fair value of hedging instrument		0.6			(1.5	)
Reclassification of gain on hedging instrument to comprehensive income		0.5			0.4
Actuarial gains on pension plan		4.6			4.4
Other comprehensive income/(loss)		4.6			6.4
Comprehensive loss	$	(12.1	)	$	(3.4	)
Net loss per common share – basic and diluted	$	(0.74	)	$	(0.44	)
Weighted average number of shares outstanding during the period – basic and diluted		22,584,609			22,384,268
Supplemental disclosure of stock-based compensation expense
Stock-based compensation included in:
Selling, general and administrative expenses	$	(1.4	)	$	(1.0	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

THREE MONTHS ENDED MARCH 31, 2021

(in millions, except share data)

(Unaudited)

	Common stock				Additional paid in		Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital		income			deficit			deficit
Balance as of December 31, 2020		22,430,475		—		324.6		31.1			(457.4	)		(101.7	)
Foreign currency translation adjustments		—		—		—		(1.1	)		—			(1.1	)
Actuarial gains on pension plan		—		—		—		4.6			—			4.6
Change in fair value of hedging instrument		—		—		—		0.6			—			0.6
Reclassification of loss on hedging instrument to comprehensive income		—		—		—		0.5			—			0.5
Shares issued in net settlement of RSUs		163,732		—		—		—			—			—
Stock-based compensation expense		—		—		1.4		—			—			1.4
Net loss		—		—		—		—			(16.7	)		(16.7	)
Balance as of March 31, 2021		22,594,207	$	—	$	326.0	$	35.7		$	(474.1	)	$	(112.4	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

THREE MONTHS ENDED MARCH 31, 2020

(in millions, except share data)

(Unaudited)

	Common stock				Additional paid in		Accumulated other comprehensive			Accumulated			Total stockholders’
	Shares		Amount		capital		income			deficit			deficit
Balance as of December 31, 2019		22,230,768		—		320.6		45.1			(425.0	)		(59.3	)
Foreign currency translation adjustments		—		—		—		3.1			—			3.1
Actuarial gains on pension plan		—		—		—		4.4			—			4.4
Change in fair value of hedging instrument		—		—		—		(1.5	)		—			(1.5	)
Reclassification of loss on hedging instrument to comprehensive income		—		—		—		0.4			—			0.4
Shares issued in net settlement of RSUs		166,959		—		—		—			—			—
Stock-based compensation expense		—		—		1.0		—			—			1.0
Net loss		—		—		—		—			(9.8	)		(9.8	)
Balance as of March 31, 2020		22,397,727	$	—	$	321.6	$	51.5		$	(434.8	)	$	(61.7	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

INSPIRED ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

	Three Months Ended March 31,
	2021			2020
Cash flows from operating activities:
Net loss	$	(16.7	)	$	(9.8	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		13.1			12.6
Amortization of right of use asset		0.6			0.9
Stock-based compensation expense		1.4			1.0
Impairment of investment in equity method investee		—			0.7
Foreign currency translation on senior bank debt		(6.1	)		3.9
Change in fair value of warrant liability		3.0			(7.6	)
Reclassification of loss on hedging instrument to comprehensive income		0.2			0.4
Non-cash interest expense relating to senior debt		1.3			0.5
Changes in assets and liabilities:
Accounts receivable		6.7			(10.0	)
Inventory		0.7			1.3
Prepaid expenses and other assets		4.3			5.7
Corporate tax and other current taxes payable		(8.6	)		0.1
Accounts payable		3.0			4.9
Deferred revenues and customer prepayment		(4.5	)		(0.5	)
Accrued expenses		0.4			7.5
Operating lease liabilities		(0.7	)		(0.8	)
Other long-term liabilities		(0.1	)		0.3
Net cash (used in) provided by operating activities		(2.0	)		11.1
Cash flows from investing activities:
Purchases of property and equipment		(2.0	)		(8.4	)
Disposals of property and equipment		—			1.0
Purchases of capital software		(2.8	)		(3.6	)
Net cash used in investing activities		(4.8	)		(11.0	)
Cash flows from financing activities:
Proceeds from issuance of revolver		—			22.3
Repayments of finance leases		(0.2	)		(0.1	)
Net cash (used in) provided by financing activities		(0.2	)		22.2
Effect of exchange rate changes on cash		1.1			(2.9	)
Net (decrease) increase in cash		(5.9	)		19.4
Cash, beginning of period		47.1			29.1
Cash, end of period	$	41.2		$	48.5
Supplemental cash flow disclosures
Cash paid during the period for interest	$	6.8		$	0.1
Cash paid during the period for income taxes	$	—		$	—
Cash paid during the period for operating leases	$	0.3		$	1.0
Supplemental disclosure of noncash investing and financing activities
Property and equipment acquired through finance lease	$	1.3		$	—
Lease liabilities arising from obtaining right of use assets	$	—		$	(0.9	)
Adjustment to goodwill arising from adjustment to fair value of assets acquired	$	—		$	(0.3	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

1. Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies

Company Description and Nature of Operations

We are a global gaming technology company, supplying content, platform and other products and services to online and land-based regulated lottery, betting and gaming operators worldwide through a broad range of distribution channels, predominantly on a business-to-business basis. We provide end-to-end digital gaming solutions (i) on our own proprietary and secure network, which accommodates a wide range of devices, including land-based gaming machine terminals, mobile devices and online computer applications and (ii) through third party networks. Our content and other products can be found through the consumer-facing portals of our interactive customers and, through our land-based customers, in licensed betting offices, adult gaming centers, pubs, bingo halls, airports, motorway service areas and leisure parks.

Management Liquidity Plans

As of March 31, 2021, the Company’s cash on hand was $41.2 million, and the Company had working capital of $1.4 million. The Company recorded net losses of $16.4 million and $10.2 million for the three months ended March 31, 2021 and 2020, respectively. Net losses include excess depreciation and amortization over capital expenditure of $8.3 million and $0.6 million for the three months ended March 31, 2021, and 2020, respectively, non-cash stock-based compensation of $1.4 million and $1.0 million for the three months ended March 31, 2021 and 2020, respectively, and non-cash changes in fair value of warrant liability of $3.0 million loss and $7.6 million income for the three months ended March 31, 2021 and 2020, respectively. Historically, the Company has generally had positive cash flows from operating activities and has relied on a combination of cash flows provided by operations and the incurrence of debt and/or the refinancing of existing debt to fund its obligations. Cash flows used in operations amounted to $2.0 million and $11.1 million provided by operations for the three months ended March 31, 2021 and 2020, respectively with the change year on year due to land based operations being subject to full lockdown restrictions for the three months ended March 31, 2021. Working capital of $1.4 million includes a non-cash settled item of $9.3 million of deferred income, and an item not expected to be cash settled of $16.0 million comprising a warrant liability. Management currently believes that, absent any unanticipated COVID-19 impact (see below), the Company’s cash balances on hand, cash flows expected to be generated from operations, ability to control and defer capital projects and amounts available from the Company’s external borrowings will be sufficient to fund the Company’s net cash requirements through May 2022.

Our business continues to be adversely affected by the continuing nature of the COVID-19 pandemic. Due to the fluidity with which the situation continues to develop, we are not able at this time to estimate the extent of the impact of the COVID-19 pandemic on our financial results and operations in future periods. The long-term impacts of the pandemic on the global economy, trade relations, consumer behavior, our industry and our business operations remain unknown, however the vaccination programme in the UK began on December 8, 2020, and as of the date of this report, whilst the majority of retail venues in Italy and Greece are closed, the UK is poised to re-open retail venues from May 17, 2021, and the vaccination programme in the UK remains on schedule.

As a result of the significant reductions in revenue and other changes to our business, at least in the short term (which also affects other companies in our industry), we continue to protect our existing available liquidity by pro-actively managing capital expenditures and working capital as well as identifying both immediate and longer term opportunities for cost savings.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

6

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2020 and 2019. The financial information as of December 31, 2020 is derived from the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2021 (“the Original 10-K”), and as amended and filed on Form 10-K/A with the SEC on May 10, 2021 (“the 10-K/A”). The interim results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.

Restatement of Previously Reported Information

On May 7, 2021, after consultation with Marcum LLP, the Company’s independent registered public accounting firm, the Company’s management and the audit committee of the Company’s Board of Directors concluded that it was appropriate to restate the Company’s previously issued audited financial statements as of December 31, 2020, and December 31, 2019, and for the years ended December 31, 2020, and December 31, 2019, which were included in the Original 10-K.

The restatement related to the SEC’s public statement released on April 12, 2021, informing market participants that warrants issued by special purpose acquisition companies may require classification as a liability of the entity measured at fair value, with changes in fair value each period reported in earnings.

The effect of the restatement on previously reported information for the three months ended March 31, 2020 is as follows:

	As Previously Reported			Adjustments			As Restated
	(in millions, except per share data)
Consolidated Statements of Stockholders’ Deficit as of January 1, 2020
Additional paid in capital	$	346.6		$	(26.0	)	$	320.6
Accumulated deficit		(441.2	)		16.2			(425.0	)
Consolidated Statement of Operations and Comprehensive Loss for the three months ended March 31, 2020
Change in fair value of warrant liability	$	—		$	7.6		$	7.6
Net loss		(17.4	)		7.6			(9.8	)
Comprehensive loss		(11.0	)		7.6			(3.4	)
Net loss per common share – basic and diluted	$	(0.78	)	$	0.34		$	(0.44	)
Consolidated Statements of Stockholders’ Deficit as of March 31, 2020
Additional paid in capital	$	347.6		$	(26.0	)	$	321.6
Accumulated deficit		(458.6	)		23.8			(434.8	)

Recharacterization of Previously Reported Information

In prior years, and up to and including the interim period nine months ended September 30, 2020, the Company operated its business along three operating segments: Server Based Gaming, Virtual Sports (which included Interactive) and Acquired Businesses. During the period subsequent to September 30, 2020, the Company completed the process of changing its internal structure, which has been ongoing since the NTG Acquisition, and as a result changed the composition of its operating segments. The Company now operates its business along four operating segments, which are segregated on the basis of revenue stream: Gaming, Virtual Sports, Interactive and Leisure. The Company believes this method of segment reporting reflects both the way its business segments are now managed and the way the performance of each segment is now evaluated.

As part of the recharacterization exercise, certain items of Revenue, Cost of Sales and Selling, General and Administrative Expenses have been recharacterized to ensure consistency with similar items across the Group. The revenue recharacterizations are to ensure spares and similar items are reflected with other items of hardware (Product Sales). The resulting impact on previously reported information for the three months ended March 31, 2020 is as follows: Service Revenue, previously reported $43.2 million, now $42.8 million; Product Sales Revenue, previously reported $9.1 million, now $9.5 million; Cost of Service, previously reported $6.6 million, now $8.5 million; Cost of Product Sales, previously reported $7.0 million, now $6.2 million; Selling, General and Administrative Expenses (excluding Stock-based compensation), previously reported $29.1 million, now $28.0 million. The recharacterization has no impact on the previously reported Net Operating Loss, Net Loss or Net Comprehensive Loss for the three months ended March 31, 2020.

7

2. Inventory

Inventory consists of the following:

	March 31, 2021		December 31, 2020
	(in millions)
Component parts	$	11.5	$	12.1
Work in progress		1.8		1.7
Finished goods		3.8		3.8
Total inventories	$	17.1	$	17.6

Component parts include parts for gaming terminals. Included in component parts are reserves for excess and slow-moving inventory of $1.8 million and $1.5 million as of March 31, 2021 and December 31, 2020, respectively. Our finished goods inventory primarily consists of gaming terminals which are ready for sale.

3. Contract Liabilities and Other Disclosures

The following table summarizes contract related balances:

	Accounts Receivable		Unbilled Accounts Receivable		Deferred Income			Customer Prepayments and Deposits
	(in millions)
At March 31, 2021	$	23.8	$	5.0	$	(18.5	)	$	(1.8	)
At December 31, 2020	$	30.4	$	8.2	$	(22.9	)	$	(1.6	)
At December 31, 2019	$	24.5	$	15.3	$	(27.8	)	$	(1.9	)

Revenue recognized that was included in the deferred income balance at the beginning of the period amounted to $3.9 million and $10.3 million for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively.

8

4. Derivatives and Hedging Activities

On January 15, 2020, the Company entered into two interest rate swaps with UBS AG designed to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows on a portion of the current floating rate debt facilities. The swaps fix the variable interest rate of the current debt facilities and provide protection over potential interest rate increases by providing a fixed rate of interest payment in return. These interest rate swaps are for £95 million ($131.1 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and for €60 million ($70.5 million) at a fixed rate of 0.102% based on the 6 month EURIBOR rate and are effective until maturity on October 1, 2023.

Hedges of Multiple Risks

The Company’s objectives in using interest rate derivatives are to add stability to interest and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $1.5 million will be reclassified as an increase to interest expense.

As of March 31, 2021, and December 31, 2020, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivative	Number of Instruments	Notional
Interest rate swaps	2	£95 million ($131.1 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and €60 million ($70.5 million) at a fixed rate of 0.102% based on the 6 month EURIBOR rate

9

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheet as of March 31, 2021.

	Balance Sheet Classification		Asset Derivatives Fair Value		Balance Sheet Classification	Liability Derivatives Fair Value
			(in millions)			(in millions)
Derivatives designated as hedging instruments:
Interest Rate Products		Fair Value of Hedging Instruments	$	—	Derivative Liability	$	(1.7	)
Total derivatives designated as hedging instruments			$	—		$	(1.7	)

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheet as of December 31, 2020.

	Balance Sheet Classification		Asset Derivatives Fair Value		Balance Sheet Classification	Liability Derivatives Fair Value
			(in millions)			(in millions)
Derivatives designated as hedging instruments:
Interest Rate Products		Fair Value of Hedging Instruments	$	—	Other Current Liabilities and Long Term Derivative Liability	$	(2.6	)
Total derivatives designated as hedging instruments			$	—		$	(2.6	)

The table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the three months ended March 31, 2021.

	Amount of Gain/(Loss) Recognized in Other Comprehensive Income on Derivative			Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income
	(in millions)			(in millions)
Interest Rate Products	$	0.6	Interest Expense	$	(0.5	)
Total	$	0.6		$	(0.5	)

The table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the three months ended March 31, 2020.

	Amount of Gain Recognized in Other Comprehensive Income on Derivative				Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income
	(in millions)				(in millions)
Interest Rate Products	$	(1.5	)	Interest Expense	$	(0.4	)
Total	$	(1.5	)		$	(0.4	)

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2021.

	Interest Expense
	(in millions)
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$	8.6
Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$	(0.5	)

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2020.

	Interest Expense
	(in millions)
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$	6.1
Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$	(0.4	)

10

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2021 and December 31, 2020. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheet.

The ISDA Master Agreement between Gaming Acquisitions Limited, a wholly-owned subsidiary of the Company, and UBS AG is documented using the 2002 Form and the ISDA standard set-off provision in Section 6(f) of the ISDA Master Agreement apply to both parties and is only modified to include Affiliates of the Payee. There is no CSA and thus there is no collateral posting.

Offsetting of Derivative Assets

March 31, 2021

Gross Amounts Not Offset in the Statement of Financial Position

Gross Amounts of Recognized Assets

Gross Amounts Offset in the Statement of Financial Position

Net Amounts of Assets presented in the Statement of Financial Position

Financial Instruments

Cash Collateral Received

Net Amount

(in millions)

Fair value of hedging instrument

$

—

$

—

$

—

$

—

$

—

$

—

Offsetting of Derivative Liabilities
March 31, 2021
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
	(in millions)
Fair value of hedging instrument	$	1.7	$	—	$	1.7	$	—	$	—	$	—

Offsetting of Derivative Assets

December 31, 2020

Gross Amounts Not Offset in the Statement of Financial Position

Gross Amounts of Recognized Assets

Gross Amounts Offset in the Statement of Financial Position

Net Amounts of Assets presented in the Statement of Financial Position

Financial Instruments

Cash Collateral Received

Net Amount

(in millions)

Fair value of hedging instrument

$

—

$

—

$

—

$

—

$

—

$

—

Offsetting of Derivative Liabilities
December 31, 2020
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
	(in millions)
Fair value of hedging instrument	$	2.6	$	—	$	2.6	$	—	$	—	$	—

Credit-risk-related Contingent Features

The Company has entered into an industry standard ISDA Master Agreement, with a negotiated Scheduled thereto (the “ISDA Agreement”), with the counterparty to its derivative transactions and which ISDA Agreement sets forth various provisions which govern the trading relationship between the Company and its counterparty. Such provisions include certain events which, if triggered by either party, may give rise to an acceleration of the ISDA Agreement, thus triggering the exchange of a breakage payment between the parties.

The ISDA Agreement with the Company’s derivative counterparty contains a provision where the Company could be declared in default on its derivative obligations if, among others, its repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. The ISDA Agreement can also be accelerated if Lucid Trustee Services Limited requests or requires that the lender terminates or closes-out any Transaction under the ISDA Agreement pursuant to Clause 4.10 of the Intercreditor Agreement between primarily the Company, Lucid Agency Services as Senior Agent and Lucid Trustee Services Limited as Security Agent; in the event of certain refinancing circumstances; and in the event of certain reductions in the principal with respect to amounts loaned under the Senior Facilities Agreement.

As of March 31, 2021, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to the ISDA Agreements was $1.7 million. As of March 31, 2021, the Company has not posted any collateral related to the ISDA Agreement, as no collateral is required under the terms of such ISDA Agreement. If the Company had breached any of the provision under the ISDA Agreement which resulted in an acceleration of the ISDA Agreement at March 31, 2021, it could have been required to settle its obligations under the ISDA Agreement at its termination value of $2.5 million

11

5. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset and liability in an orderly transaction between market participants at the measurement date. We estimate the fair value of our assets and liabilities utilizing an established three-level hierarchy. The hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date as follows:

Level 1:	Quoted prices in active markets for identical assets or liabilities.
Level 2:	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 2 inputs also include non-binding market consensus prices that can be corroborated with observable market data, as well as quoted prices that were adjusted for security-specific restrictions.
Level 3:	Unobservable inputs that are supported by little or no market activity that are significant to the fair value of the asset or liability. Level 3 inputs also include non-binding market consensus prices or non-binding broker quotes that are unable to be corroborated with observable market data.

The fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as appropriate. We believe the fair value of our financial instruments approximates their recorded values.

For each period, derivative financial instrument assets and liabilities measured at fair value on a recurring basis are included in the financial statements as per the table below.

		March 31,		December 31,
	Level	2021		2020
		(in millions)
Public Warrants (included in warrant liability)	1	$	4.3	$	3.2
Long term receivable (included in other assets)	2	$	1.3	$	1.4
Private Placement Warrants (included in warrant liability)	2	$	11.7	$	9.8
Derivative liability (see Note 4)	2	$	1.7	$	2.6

Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s principal financial officer, who reports to the principal executive officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Principal Financial Officer and approved by the Principal Executive Officer.

At March 31, 2021 and December 31, 2020, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy.

6. Stock-Based Compensation

The Company’s stock-based compensation plans authorize awards of restricted stock units (“RSUs”), stock options and other equity-related awards. The Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”) was approved by stockholders in May 2019 and is the successor to the Company’s 2016 Long-Term Incentive Plan and the Second Long-Term Incentive Plan (collectively, the “Prior Plans”). The balances available for awards under the Prior Plans were terminated in connection with approval of the 2018 Plan; although outstanding awards under the Prior Plans remain governed by the terms of the Prior Plans, no new awards may be granted or become available for grant under the Prior Plans. See Note 17 “Subsequent Events” below regarding the Company’s adoption of the 2021 Omnibus Incentive Plan on April 12, 2021 which was approved by our stockholders on May 11, 2021.

12

As of March 31, 2021, there were (i) 1,777,611 shares subject to outstanding awards under the 2018 Plan, including 75,000 shares subject to performance-based target awards and 259,300 shares subject to awards that were previously subject to performance criteria that were determined to have been met for the applicable performance year which awards continue to remain subject to a time-based vesting schedule; and (ii) 2,411,319 shares subject to outstanding awards under the Prior Plans, including 1,092,633 shares subject to market-price vesting conditions that have a satisfaction deadline of December 23, 2021. As of March 31, 2021, there were 221,799 shares available for new awards under the 2018 Plan and no shares available for new awards under the Prior Plans. All awards consist of RSUs and Restricted Stock.

The Company also has an employee stock purchase plan (“ESPP”) that authorizes the issuance of up to an aggregate of 500,000 shares of common stock pursuant to purchases thereunder by employees. The ESPP, which was approved by stockholders in July 2017, is administered by the Compensation Committee which has discretion to designate the length of offering periods and other terms subject to the requirements of the ESPP. As of March 31, 2021, a total of 467,751 shares remain available for purchase under the ESPP.

A summary of the Company’s RSU activity during the three months ended March 31, 2021 is as follows:

	Number of Shares
Unvested Outstanding at January 1, 2021		2,149,118
Granted		59,466
Forfeited		(13,954	)
Vested		(11,418	)
Unvested Outstanding at March 31, 2021		2,183,212

The Company issued a total of 163,732 shares during the three months ended March 31, 2021 in connection with the net settlement of RSUs that vested on December 31, 2020.

Stock-based compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. For performance awards that are contingent upon the Company achieving certain pre-determined financial performance targets, compensation expense is calculated based on the number of shares expected to vest after assessing the probability that the performance criteria will be met. Determining the probability of achieving a performance target requires estimates and judgment.

The Company recognized $1.4 million and $1.0 million of stock-based compensation expense during the three months ended March 31, 2021 and 2020, respectively. Total unrecognized compensation expense related to unvested stock awards and unvested RSUs at March 31, 2021 amounts to $5.0 million and is expected to be recognized over a weighted average period of 1 year.

13

7. Accumulated Other Comprehensive Loss (Income)

The accumulated balances for each classification of comprehensive loss (income) are presented below:

	Foreign Currency Translation Adjustments			Change in Fair Value of Hedging Instrument			Unrecognized Pension Benefit Costs			Accumulated Other Comprehensive (Income)
	(in millions)
Balance at January 1, 2021		(71.1	)		2.8			37.2			(31.1	)
Change during the period		1.1			(1.1	)		(4.6	)		(4.6	)
Balance at March 31, 2021	$	(70.0	)	$	1.7		$	32.6		$	(35.7	)

	Foreign Currency Translation Adjustments			Change in Fair Value of Hedging Instrument		Unrecognized Pension Benefit Costs			Accumulated Other Comprehensive (Income)
	(in millions)
Balance at January 1, 2020		(76.5	)		1.4		30.0			(45.1	)
Change during the period		(3.1	)		1.1		(4.4	)		(6.4	)
Balance at March 31, 2020	$	(79.6	)	$	2.5	$	25.6		$	(51.5	)

Included within accumulated other comprehensive income is an amount of $0.4 million relating to the change in fair value of discontinued hedging instruments. This amount will be amortized as a charge to income over the life of the original instrument, to August 2021 in accordance with US GAAP. The remaining $1.3 million relates to currently active hedging instruments.

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8. Net Loss per Share

Basic loss per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period, including stock options, restricted stock, RSUs and warrants, using the treasury stock method, and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.

The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

	Three Months Ended March 31,
	2021		2020
RSUs		3,564,814		2,954,493
Unvested Restricted Stock		624,116		624,116
Stock Warrants		9,539,565		9,539,565
		13,728,495		13,118,174

9. Other Finance Income (Expense)

Other finance income (expense) consisted of the following:

	Three Months Ended March 31,
	2021			2020
	(in millions)
Pension interest cost	$	(0.4	)	$	(0.6	)
Expected return on pension plan assets		0.7			0.8
Foreign currency translation on senior bank debt		6.1			(3.9	)
	$	6.4		$	(3.7	)

15

10. Income Taxes

The effective income tax rate for the three months ended March 31, 2021 and 2020 was 4.0% and 2.0%, respectively, resulting in a $0.7 million income tax benefit and a $0.2 million income tax expense, respectively. The Company’s effective income tax rate has fluctuated primarily as a result of the income mix between jurisdictions.

The income tax expense for the three months ended March 31, 2021 and 2020 differs from the amount that would be expected after applying the statutory U.S. federal income tax rate primarily due to pre-tax losses for which no tax benefit can be recorded, and foreign earnings being taxed at rates different than the US statutory rate.

11. Related Parties

Macquarie Corporate Holdings Pty Limited (UK Branch) (“Macquarie UK”), is an affiliate of MIHI LLC, the beneficial owner of approximately 13% of our common stock. Macquarie UK is one of the lending parties with respect to our senior secured term loans and revolving credit facility under our senior facilities agreement dated September 27, 2019, as amended and restated on June 25, 2020 (the “SFA”). The portion of the total loans of $310.6 million at March 31, 2021, and $313.3 million at December 31, 2020, under these facilities held by Macquarie UK at March 31, 2021 and December 31, 2020 was $30.4 million and $30.7 million, respectively. Interest expense payable to Macquarie UK for the three months ended March 31, 2021 and 2020 amounted to $0.6 million and $0.5 million, respectively. In addition, $0.5 million and $0.6 million of accrued interest payable was due to Macquarie UK at March 31, 2021 and December 31, 2020, respectively. MIHI LLC, also holds warrants to purchase 1,000,000 shares of our common stock and is a party to a stockholders agreement with the Company and other stockholders, dated December 23, 2016, pursuant to which, subject to certain conditions, MIHI LLC, jointly with Hydra Industries Sponsor LLC, are permitted to designate two directors to be nominated for election as directors of the Company at any annual or special meeting of stockholders at which directors are to be elected, until such time as MIHI LLC and Hydra Industries Sponsor LLC in the aggregate hold less than 5% of the outstanding shares of the Company.

12. Leases

The Company is party to leases with third parties with respect to various gaming machines. Gaming machine leases typically include a lease (of the machine) and a non-lease (provision of software services) component.

The components of lease income were as follows:

	Three Months Ended March 31,
	2021		2020
	(in millions)
Interest receivable from sales type leases	$	—	$	—
Operating lease income		—		1.0
Variable income from sales type leases		—		0.2
Total	$	—	$	1.2

13. Commitments and Contingencies

Employment Agreements

We are party to employment agreements with our executive officers and other employees of the Company and our subsidiaries which contain, among other terms, provisions relating to severance and notice requirements.

Our employment agreement with our Executive Chairman dated October 9, 2020 provides that, subject to the terms and conditions thereunder, our Executive Chairman would receive special grants covering 750,000 RSUs (a mix of time-based RSUs, performance-based RSUs and stock-price based RSUs) during the year ending December 31, 2021, subject to the condition that our stockholders approve an increase in our equity incentive plan share authorization limit at the annual meeting of our stockholders to be held during 2021. Such RSUs were granted on May 11, 2021 upon the approval by our stockholders of a new equity incentive plan (see Note 17).

Legal Matters

From time to time, the Company may become involved in lawsuits and legal matters arising in the ordinary course of business. While the Company believes that, currently, it has no such matters that are material, there can be no assurance that existing or new matters arising in the ordinary course of business will not have a material adverse effect on the Company’s business, financial condition or results of operations.

16

14. Pension Plan

We operate a defined contribution plan in the US, and both defined benefit and defined contribution pension schemes in the UK. The defined contribution scheme assets are held separately from those of the Company in independently administered funds.

Defined Benefit Pension Scheme

The defined benefit scheme has been closed to new entrants since April 1, 1999 and closed to future accruals for services rendered to the Company for the entire financial statement periods presented. On March 15, 2019, it was agreed that no further deficit reduction contributions would be made to the scheme, except in the event that the scheme funding level does not progress as expected, in which case contingent contributions would be made subject to an agreed maximum amount.

In January 2021, the funding level of the scheme was tested against the expected position at December 31, 2020 and it was determined that further contingent contributions of $1.2 million and expense contributions of $0.4 million will be payable during the year ending December 31, 2021.

The funding level of the scheme will next be tested against the expected position at December 31, 2021 to determine whether further contingent contributions are payable during the year ending December 31, 2022.

The total amount of employer contributions paid during the three months ended March 31, 2021 amounted to $0.1 million relating to the three months ended March 31, 2021, and $0.4 million of contributions relating to the year ending December 31, 2020 agreed with the trustees of the scheme to be deferred into the year ending December 31, 2021.

The following table presents the components of our net periodic pension benefit cost:

	Three Months Ended March 31,
	2021			2020
	(in millions)
Components of net periodic pension benefit cost:
Interest cost	$	0.4		$	0.6
Expected return on plan assets		(0.7	)		(0.8	)
Net periodic (benefit) cost	$	(0.3	)	$	(0.2	)

The following table sets forth the estimate of the combined funded status of the pension plans and their reconciliation to the related amounts recognized in our consolidated financial statements at the respective measurement dates:

	March 31, 2021			December 31, 2020
	(in millions)
Change in benefit obligation:
Benefit obligation at beginning of period	$	127.8		$	110.4
Interest cost		0.4			2.2
Actuarial (gain)/loss		(9.9	)		14.5
Benefits paid		(0.6	)		(4.1	)
Foreign currency translation adjustments		1.5			4.8
Benefit obligation at end of period	$	119.2		$	127.8
Change in plan assets:
Fair value of plan assets at beginning of period	$	118.7		$	107.3
Actual (loss)/gain on plan assets		(4.8	)		9.8
Employer contributions		0.1			1.6
Benefits paid		(0.6	)		(4.1	)
Foreign currency translation adjustments		1.3			4.1
Fair value of assets at end of period	$	114.7		$	118.7
Amount recognized in the consolidated balance sheets:
Unfunded status (non-current)	$	(4.5	)	$	(9.1	)
Net amount recognized	$	(4.5	)	$	(9.1	)

17

15. Segment Reporting and Geographic Information

The Company operates its business along four operating segments, which are segregated on the basis of revenue stream: Gaming, Virtual Sports, Interactive and Leisure. The Company believes this method of segment reporting reflects both the way its business segments are managed and the way the performance of each segment is evaluated.

In prior years, and up to and including the interim period nine months ended September 30, 2020, the Company operated its business along three operating segments: Server Based Gaming, Virtual Sports (which included Interactive) and Acquired Businesses. During the period subsequent to September 30, 2020, the Company completed the process of changing its internal structure, which has been ongoing since the NTG Acquisition, and as a result changed the composition of its operating segments.

The following tables present revenue, cost of sales, excluding depreciation and amortization, selling, general and administrative expenses, depreciation and amortization, stock-based compensation expense and acquisition related transaction expenses, operating profit/(loss), total assets and total capital expenditures for the periods ended March 31, 2021 and March 31, 2020, respectively, by business segment. Certain unallocated corporate function costs have not been allocated to the Company’s reportable operating segments because these costs are not allocable and to do so would not be practical. Corporate function costs consist primarily of selling, general and administrative expenses, depreciation and amortization, capital expenditures, right of use assets, cash, prepaid expenses and property and equipment and software development costs relating to corporate/shared functions. All acquisition and integration related transaction expenses are allocated as corporate function costs. Amounts previously disclosed for the three months ended March 31, 2020 have been recharacterized in line with the current operating segments and categories.

In addition, as part of the recharacterization exercise, certain items of Revenue, Cost of Sales and Selling, General and Administrative Expenses have been recharacterized to ensure consistency with similar items across the Group. The revenue recharacterizations are to ensure spares and similar items are reflected with other items of hardware (Product Sales). The resulting impact on previously reported information for the three months ended March 31, 2020 is as follows: Service Revenue, previously reported $43.2 million, now $42.8 million; Product Sales Revenue, previously reported $9.1 million, now $9.5 million; Cost of Service, previously reported $6.6 million, now $8.5 million; Cost of Product Sales, previously reported $7.0 million, now $6.2 million; Selling, General and Administrative Expenses (excluding Stock-based compensation), previously reported $29.1 million, now $28.0 million. The recharacterization has no impact on the previously reported Net Operating Loss, Net Loss or Net Comprehensive Loss for the three months ended March 31, 2020.

Segment Information

Three Months Ended March 31, 2021

	Gaming			Virtual Sports			Interactive			Leisure			Corporate Functions			Total
	(in millions)
Revenue:
Service	$	5.6		$	6.3		$	5.2		$	—		$	—		$	17.1
Product sales		5.2			—			—			0.5			—			5.7
Total revenue		10.8			6.3			5.2			0.5			—			22.8
Cost of sales, excluding depreciation and amortization:
Cost of service		(0.6	)		(0.3	)		(0.8	)		(0.4	)		—			(2.1	)
Cost of product sales		(2.9	)		—			—			(0.3	)		—			(3.2	)
Selling, general and administrative expenses		(4.1	)		(1.1	)		(1.0	)		(3.2	)		(4.4	)		(13.8	)
Stock-based compensation expense		(0.2	)		(0.1	)		(0.1	)		(0.1	)		(0.9	)		(1.4	)
Acquisition and integration related transaction expenses		—			—			—			—			(1.4	)		(1.4	)
Depreciation and amortization		(6.6	)		(1.1	)		(0.7	)		(4.2	)		(0.5	)		(13.1	)
Segment operating income (loss)		(3.6	)		3.7			2.6			(7.7	)		(7.2	)		(12.2	)
Net operating loss																$	(12.2	)
Total assets at March 31, 2021	$	78.7		$	60.9		$	13.3		$	84.6		$	63.5		$	301.0
Total goodwill at March 31, 2021	$	1.5		$	48.5		$	0.4		$	34.3		$	—		$	84.7
Total capital expenditures for the three months ended March 31, 2021	$	1.2		$	0.8		$	0.9		$	3.1		$	0.2		$	6.2

18

Three Months Ended March 31, 2020

	Gaming			Virtual Sports			Interactive			Leisure			Corporate Functions			Total
	(in millions)
Revenue:
Service	$	16.6		$	7.8		$	2.1		$	16.3		$	—		$	42.8
Product sales		8.3			—			—			1.2			—			9.5
Total revenue		24.9			7.8			2.1			17.5			—			52.3
Cost of sales, excluding depreciation and amortization:
Cost of service		(4.3	)		(0.7	)		(0.2	)		(3.3	)		—			(8.5	)
Cost of product sales		(5.4	)		—			—			(0.8	)		—			(6.2	)
Selling, general and administrative expenses		(8.9	)		(1.2	)		(1.2	)		(11.0	)		(5.7	)		(28.0	)
Stock-based compensation expense		(0.1	)		(0.1	)		—			—			(0.8	)		(1.0	)
Acquisition and integration related transaction expenses		—			—			—			—			(3.2	)		(3.2	)
Depreciation and amortization		(7.4	)		(0.8	)		(0.6	)		(3.4	)		(0.4	)		(12.6	)
Segment operating income (loss)		(1.2	)		5.0			0.1			(1.0	)		(10.1	)		(7.2	)
Net operating loss																$	(7.2	)
Total assets at December 31, 2020	$	93.9		$	64.4		$	8.5		$	87.0		$	70.3		$	324.1
Total goodwill at December 31, 2020	$	1.4		$	48.0		$	0.4		$	33.9		$	—		$	83.7
Total capital expenditures for the three months ended March 31, 2020	$	2.7		$	1.0		$	0.6		$	5.2		$	2.3		$	11.8

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Geographic Information

Geographic information for revenue is set forth below:

	Three Months Ended March 31,
	2021		2020
	(in millions)
Total revenue
UK	$	10.9	$	38.4
Greece		2.3		4.8
Canada		1.8		0.1
Italy		1.3		2.2
Rest of world		6.5		6.8
Total	$	22.8	$	52.3

Geographic information of our non-current assets excluding goodwill is set forth below:

	March 31, 2021		December 31, 2020
	(in millions)
UK	$	97.0	$	101.8
Greece		15.2		18.2
Italy		1.9		2.1
Rest of world		9.6		9.3
Total	$	123.7	$	131.4

Software development costs are included as attributable to the market in which they are utilized.

16. Customer Concentration

During the three months ended March 31, 2021, there were two customers that represented at least 10% of the Company’s revenues, accounting for 16% and 14% of the Company’s revenues. These customers were served by the Gaming, Virtual Sports and Interactive segments, and the Virtual Sports and Interactive segments, respectively. During the three months ended March 31, 2020, there were no customers that represented at least 10% of the Company’s revenues.

At March 31, 2021 and December 31, 2020, there were no customers that represented at least 10% of accounts receivable.

17. Subsequent Events

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. Other than as described below, the Company did not identify subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

On April 12, 2021, the Company’s Board of Directors adopted the 2021 Omnibus Incentive Plan (the “2021 Plan”), subject to the approval of our stockholders, which was obtained at the Company’s annual meeting of stockholders held on May 11, 2021. The 2021 Plan authorizes a total of 2,900,000 shares to be issued pursuant to awards and will also replace the 2018 Plan such that shares available for grant under the 2018 Plan would instead be available for grant under the 2021 Plan. Upon approval of the 2021 Plan, the Company’s Executive Chairman received the sign-on equity awards discussed above pursuant to the terms of his employment agreement (see Note 13).

On May 13, 2021, the Company issued a press release announcing that Inspired Entertainment (Financing) PLC, a wholly owned finance subsidiary of the Company, priced a private offering of £235.0 million ($324.2 million) aggregate principal amount of its 7.875% senior secured notes due 2026 (the “2026 Senior Secured Notes”). The 2026 Senior Secured Notes will be guaranteed by the Company and certain of its English and U.S. subsidiaries. The offering is expected to close on or about May 20, 2021, subject to customary closing conditions.

The Company intends to use the proceeds from the offering of the 2026 Senior Secured Notes (i) to repay its existing £145.8 million ($201.1 million) senior secured term loan facility and €93.1 million ($109.4 million) senior secured term loan facility and accrued interest thereon, (ii) to pay fees, commissions and expenses incurred in connection with the refinancing, and (iii) for general corporate purposes, including to close-out derivative contracts entered into in connection with the existing term loan facilities. As part of the refinancing, the Company will also be putting into place a new 4.5 year £20 million ($27.6 million) Super Priority Senior Secured Revolving Credit Facility.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes thereto included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual future results could differ materially from the historical results discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included herein and in our annual report on Form 10-K for the fiscal year ended December 31, 2020.

Forward-Looking Statements

We make forward-looking statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations. For definitions of the term Forward-Looking Statements, see the definitions provided in the Cautionary Note Regarding Forward-Looking Statements at the start of the Quarterly Report on Form 10-Q for the period ended March 31, 2021.

COVID-19 Update

Governments in certain of the jurisdictions in which our land-based customers operate have either (i) provided guidance as to the potential timing for reopening land-based venues in such jurisdictions or (ii) reopened land-based venues with certain restrictions. As of April 12, 2021, in the United Kingdom, licensed betting offices in England have reopened with certain restrictions including operating two of four gaming machines per venue, limited dwell time of 15 minutes, as well as a maximum of two visits per day per patron and an 8:00pm curfew. These restrictions are expected to remain in place until May 17, 2021. Gaming machines in pubs, holiday parks, motorway services, Scottish betting offices and adult gaming centers across the United Kingdom are due to open on May 17, 2021 with social distancing restrictions in place. It is currently anticipated that any social distancing restrictions will remain in place in the United Kingdom until June 21, 2021. Furthermore, betting offices in Wales have reopened with certain social distancing restrictions in place.

Segment Reporting Recharacterizations

For full information on this, see Part IV, Item 15 of the Annual Report on Form 10-K for the year ended December 31, 2020, ‘Exhibits, Financial Statement Schedules’ Note 26 ‘Segment Reporting and Geographic Information’.

Revenue

We generate revenue in four principal ways: i) on a participation basis, ii) on a fixed rental fee basis, iii) through product sales and iv) through software license fees. Participation revenue generally includes a right to receive a share of our customers’ gaming revenue, typically as a share of net win but sometimes as a share of the handle or “coin in” which represents the total amount wagered.

Geographic Range

Geographically, a majority of our revenue is derived from, and majority of our non-current assets are attributable to our UK operations. The remainder of our revenue is derived from, and non-current assets attributable to, Greece, Canada, Italy and the rest of the world.

For the three months ended March 31, 2021, we earned approximately 48% of our revenue in the UK, 10% in Greece, 8% in Canada, 6% in Italy and the remaining 28% across the rest of the world. During the three months ended March 31, 2020, we earned approximately 73%, 9%, 0%, 4% and 13% of our revenue in those regions, respectively.

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As of March 31, 2021, our non-current assets (excluding goodwill) attribution approximately 78% in the UK, 12% in Greece, 2% in Italy, and 8% across the rest of the world.

Foreign Exchange

Our results are affected by changes in foreign currency exchange rates as a result of the translation of foreign functional currencies into our reporting currency and the re-measurement of foreign currency transactions and balances. The impact of foreign currency exchange rate fluctuations represents the difference between current rates and prior-period rates applied to current activity. The largest geographic region in which we operate is the UK and the British pound (“GBP”) is considered to be our functional currency. Our reporting currency is the U.S. dollar (“USD”). Our results are translated from our functional currency of GBP into the reporting currency of USD using average rates for profit and loss transactions and applicable spot rates for period-end balances. The effect of translating our functional currency into our reporting currency, as well as translating the results of foreign subsidiaries that have a different functional currency into our functional currency, is reported separately in Accumulated Other Comprehensive Income.

During the three months ended March 31, 2021, we derived approximately 52% of our revenue from sales to customers outside the UK, compared to 27% during the three months ended March 31, 2020.

In the section “Results of Operations” below, currency impacts shown have been calculated as the current-period average GBP:USD rate less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency (GBP). The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional currency, multiplied by the prior-period average GBP:USD rate. This is not a U.S. GAAP measure, but is one which management believes gives a clearer indication of results. In the tables below, variances in particular line items from period to period exclude currency translation movements, and currency translation impacts are shown independently.

Non-GAAP Financial Measures

We use certain financial measures that are not compliant with U.S. GAAP (“Non-GAAP financial measures”), including EBITDA and Adjusted EBITDA, to analyze our operating performance. In this discussion and analysis, we present certain non-GAAP financial measures, define and explain these measures and provide reconciliations to the most comparable U.S. GAAP measures. See “Non-GAAP Financial Measures” below.

Results of Operations

Our results are affected by changes in foreign currency exchange rates, primarily between our functional currency (GBP) and our reporting currency (USD). In the three-month periods ended March 31, 2021 and March 31, 2020, the average GBP:USD rates were 1.38 and 1.28, respectively.

The following discussion and analysis of our results of operations has been organized in the following manner:

● a discussion and analysis of the Company’s results of operations for the three-month period ended March 31, 2021, compared to the same period in 2020;

● a discussion and analysis of the results of operations of our Gaming business segment for the three-month period ended March 31, 2021, compared to the same period in 2020, including KPI analysis;

● a discussion and analysis of the results of operations of our Virtual Sports business segment for the three-month period ended March 31, 2021, compared to the same period in 2020, including KPI analysis;

● a discussion and analysis of the results of operations of our Interactive business segment for the three-month period ended March 31, 2021, compared to the same period in 2020, including KPI analysis; and

● a discussion and analysis of the results of operations of our Leisure business segment for the three-month period ended March 31, 2021, compared to the same period in 2020, including KPI analysis.

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In the discussion and analysis below, certain data may vary from the amounts presented in our consolidated financial statements due to rounding. The results for the three month periods ended March 31, 20201 and March 31, 2020 are unaudited.

Three Months ended March 31, 2021 compared to Three Months ended March 31, 2020

	For the Three-Month Period ended
(In millions)	Unaudited Mar 31, 2021			Unaudited Mar 31, 2020			Variance 2021 vs 2020			Total Functional Currency %			Total Variance %
Revenue:
Service	$	17.1		$	42.8		$	(25.7	)		(62.7	)%		(60.0	)%
Product		5.7			9.5			(3.8	)		(44.3	)%		(39.7	)%
Total revenue		22.8			52.3			(29.5	)		(59.4	)%		(56.4)	%
Cost of sales, excluding depreciation and amortization:
Cost of service		(2.1	)		(8.5	)		6.4			(76.8	)%		(75.3)	%
Cost of product		(3.2	)		(6.2	)		3.0			(52.7	)%		(48.2)	%
Selling, general and administrative expenses		(13.8	)		(28.0	)		14.2			(54.1	)%		(50.7)	%
Stock-based compensation		(1.4	)		(1.0	)		(0.4	)		30.7	%		39.5	%
Acquisition and integration related transaction expenses		(1.4	)		(3.2	)		1.8			(61.1	)%		(56.9)	%
Depreciation and amortization		(13.1	)		(12.6	)		(0.5	)		(3.4	)%		4.2	%
Net operating Income (Loss)		(12.2	)		(7.2	)		(5.0	)		55.3	%		69.9	%
Other income (expense)
Interest income		0.0			0.3			(0.3	)		(94.9	)%		(94.3)	%
Interest expense		(8.6	)		(6.1	)		(2.5	)		31.2	%		40.8	%
Change in fair value of warrant liability		(3.0	)		7.6			(10.6	)		(135.3	)%		(139.5)	%
Other finance income (expense)		6.4			(3.7	)		10.1			(257.6	)%		(273.9)	%
Loss from equity method investee		-			(0.5	)		0.5			(100.0	)%		(100.0)	%
Total other income (expense), net		(5.2	)		(2.4	)		(2.9	)		120.8	%		120.1	%
Net Income (loss) from continuing operations before income taxes		(17.4	)		(9.6	)		(7.9	)		70.6	%		82.4	%
Income tax expense		0.7			(0.2	)		0.9			(376.4	)%		(410.5	)%
Net Income (Loss)	$	(16.7	)	$	(9.8	)	$	(7.0	)		60.0	%		71.3	%
Exchange Rate - $ to £		1.38			1.28

Revenue

Total reported revenue for the three months ended March 31, 2021 decreased by $29.5 million, or 56.4%, to $22.8 million on a reported basis. This included an increase from Interactive of $3.1 million, offset by declines in Gaming of $14.1 million, Virtual Sports of $1.4 million, and, Leisure of $17.0 million. Favorable currency movements accounted for a $1.6 million impact. On a functional currency (at constant rate) basis, revenue decreased by $31.1 million, or 59.4%, as detailed below:

● Gaming revenue decreased by $14.8 million, comprised of a decrease in Service revenue of $11.3 million and a decrease in Product sales of $3.5 million. The decrease in Service revenue includes VAT-related revenue of $2.9 million (using prior year exchange rate and $3.1 million on a reported basis). Excluding the VAT-related revenue, Service revenue would have declined by $14.2 million, primarily due to COVID-19, as many of our customers’ venues were closed during much of the period (the “COVID-19 closures”). Customer gross win also declined from the comparative period, reflecting the impact of the COVID-19 closures.

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● Virtual Sports revenue decreased by $1.9 million, or 24.5%. This decrease included a $3.5 million decrease in retail revenue primarily as a result of the COVID-19 closures, partially offset by growth in Online Virtuals of $1.6 million.

● Interactive revenue increased by $2.7 million, or 124.9%. This growth was driven by the addition of new customers and territories and the consistent launch of new high-quality content as well as the increase in online demand as a result of the COVID-19 closures.

● Leisure revenue decreased by $17.0 million, comprised of a decrease in Service revenue of $16.3 million and a decrease in Product sales of $0.7 million. The decline in revenue was due to the impact of the COVID-19 closures, as venues were closed during the entire period.

Cost of sales, excluding depreciation and amortization

Cost of sales, excluding depreciation and amortization, decreased by $9.4 million, or 63.9%, on a reported basis, to $5.3 million, including the impact of $0.4 million from unfavorable currency movements. Of this decrease, $6.4 million was attributable to cost of Service and $3.0 million was attributable to cost of Product sales. On a functional currency (at constant rate) basis, cost of sales decreased by $9.8 million, or 66.5%, as detailed below:

● Gaming cost of sales decreased by $6.4 million, comprised of a decrease in Service costs of $3.7 million and $2.7 million decrease in Product costs. The Service cost decrease was driven primarily by the COVID-19 closures.

● Virtual Sports cost of sales decreased by $0.4 million, or 60.1%, driven by a $0.5 million decrease in the retail cost of sales due to COVID-19 closures, partly offset by an increase of $0.1 million in Online Virtuals.

● Interactive cost of sales increased by $0.5 million, or 193.0%. This increase was driven by the revenue growth in Interactive.

● Leisure cost of sales decreased by $3.4 million, comprised of a decrease in Service costs of $2.8 million and a decrease in Product sales of $0.6 million, which was driven primarily by the COVID-19 closures.

Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses decreased by $14.2 million, or 50.7%, on a reported basis, to $13.8 million. This included $0.9 million of unfavorable currency movements. On a functional currency (at constant rate basis), SG&A decreased by $15.1 million, or 54.1%. This decrease was driven primarily by temporary furlough savings and pay reductions and permanent synergy and other savings realized in the prior twelve months.

Stock-based compensation

During the three months ended March 31, 2021, the Company recorded an expense of $1.4 million with respect to outstanding awards. All of this expense related to costs from awards made under the 2018 Plan. During the three months ended March 31, 2020, the charge for stock-based compensation was $1.0 million. Of this expense, $0.9 million related to awards made under the 2018 Plan and $0.1 million related to costs from awards made under a 2016 long term incentive plan.

Acquisition and integration related transaction expenses

Acquisition and integration related transaction expenses decreased by $1.8 million to $1.4 million, on a reported basis. Both the 2021 and 2020 expenses were primarily related to the acquisitions made in the fourth quarter of 2019 as detailed in the annual report 10K for the fiscal year ending December, 2020.

Depreciation and amortization

Depreciation and amortization increased by $0.5 million, or 4.2%, to $13.1 million on a reported basis. This included the impact of unfavorable currency movements of $1.0 million. On a functional currency (at constant rate) basis, depreciation and amortization decreased by $0.4 million, or 3.4%, driven primarily by a decrease of $1.3 million in Gaming due to assets being fully written down, partly offset by an increase of $0.5 million in Leisure and $0.3 million in Virtual Sports.

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Net operating loss

During the period, net operating loss was $12.2 million compared to a net operating loss of $7.2 million in the prior period. The decrease of $5.0 million in operating profit was attributable to the decrease of revenue driven by the COVID-19 closures, partly offset by growth in Interactive, as well as cost savings across our Gaming, Virtual Sports and Leisure segments. This decline also included a $1.0 million unfavorable impact from foreign currency translation.

Interest expense

Net interest expense increased by $2.8 million in the three months ended March 31, 2021 to $8.6 million, on a reported basis, due to a $2.0 million increase in debt interest primarily due to capitalization of debt interest in 2020 increasing debt levels and movements in the exchange rates, a $0.3 million increase in the amortization of capitalized debt fees and a $0.6 million exchange rate impact.

Change in fair value of warrant liability

Change in fair value of warrant liability for the three months ended March 31, 2021 resulted in a $3.0 million charge. The charge related to the statement made by the Office of Chief Accountant of the SEC, released on April 12, 2021, informing market participants that warrants issued by special purpose acquisition companies may require classification as a liability of the entity measured at fair value, with changes in fair value each period reported in earnings. For the three months ended March 31, 2020, the change in fair value resulted in a $7.6 million credit.

Other finance income

Other finance income for the three months ended March 31, 2021 resulted in a $6.4 million credit compared to a $3.7 million charge in the three months ended March 31, 2020. This variance was driven by movements in the retranslation with respect to the principal balance of our senior debt facilities.

Income tax expense

Our effective tax rate for the period ended March 31, 2021 was (4.0%) and our effective tax rate for the period ended March 31, 2020 was 2.3%.

Net loss

During the period, net loss was $16.7 million compared to a net loss of $9.8 million in the prior period. On a functional currency (at constant rate) basis, net loss increased by $5.8 million, primarily due to the decline in revenue due to COVID-19 closures.

Three Months ended March 31, 2021 compared to Three Months ended March 31, 2020 – Gaming Segment

We generate revenue from our Gaming segment through the selling and rental of our gaming machines. We receive rental fees for machines, typically on a long-term contract basis, on both a participation and fixed fee basis. Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and any relevant regulatory levies) from gaming terminals placed in our customers’ facilities. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Gaming business is principally driven by the number of operator customers we have, the number of Gaming machines in operation, the net win performance of the machines and the net win percentage that we receive pursuant to our contracts with our customers.

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Gaming Segment, Key Performance Indicators

	For the Three-Month Period ended						Variance
	Unaudited Mar 31,			Unaudited Mar 31,			2021 vs 2020
Gaming	2021			2020						%
End of period installed base (# of terminals)		31,508			32,182			(674	)		(2.1	)%
Total Gaming - Average installed base (# of terminals)		31,509			32,069			(560	)		(1.7	)%
Participation - Average installed base (# of terminals)		29,564			30,311			(746	)		(2.5	)%
Fixed Rental - Average installed base (# of terminals)		1,945			1,758			187			10.6	%
Service Only - Average installed base (# of terminals)		21,738			21,114			624			3.0	%
Customer Gross Win per unit per day (1) (2)	£	0.6		£	64.5		£	(64.0	)		(99	)%
Customer Net Win per unit per day (1) (2)	£	0.4		£	47.7		£	(47.2	)		(99	)%
Inspired Blended Participation Rate		7.5	%		6.5	%		0.9	%		14.3	%
Inspired Fixed Rental Revenue per Gaming Machine per week	£	0.0		£	44.1		£	(44	)		(100	)%
Inspired Service Rental Revenue per Gaming Machine per week	£	0.76		£	3.7		£	(3	)		(79	)%
Gaming Long term license amortization (£’m)	£	1.3		£	1.2		£	0.0			3.8	%
Number of Machine sales		482			1,185			(703	)		(59	)%
Average selling price per terminal	£	6,944		£	4,361		£	2,583			59.2	%

(1)	Includes all Gaming terminals in which the company takes a participation revenue share across all territories
(2)	Includes all days of the period, including the days during which the Gaming terminals were not operating due to COVID-19 closures.

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for definitions of terms used in the above table.

Gaming Segment, Recurring Revenue

Set forth below is a breakdown of our Gaming recurring revenue. Gaming recurring revenue consists principally of Gaming participation revenue and fixed rental revenue.

	For the Three-Month Period ended						Variance
	Unaudited Mar 31,			Unaudited Mar 31,			2021 vs 2020
(In £ millions)	2021			2020						%
Gaming Recurring Revenue
Total Gaming Revenue	£	7.8		£	19.4		£	(11.6	)		(59.7	)%
Gaming Participation Revenue	£	0.2		£	8.7		£	(8.5	)		(98.1	)%
Gaming Other Fixed Fee Recurring Revenue	£	0.3		£	2.4		£	(2.1	)		(89.3	)%
Gaming Long term license amortization	£	1.3		£	1.2		£	0.0			3.8	%
Total Gaming Recurring Revenue *	£	1.7		£	12.4		£	(10.6	)		(86.1	)%
Gaming Recurring Revenue as a % of Total Gaming Revenue †		21.8	%		63.6	%		(41.7	)%

*	Does not reflect VAT-related revenue
†	Total Gaming Revenue for the three-month period ended March 31, 2021 includes the £2.3 million for VAT-related revenue, which is not reflected in Gaming Recurring Revenue for that period. Excluding VAT-related revenue, Gaming Recurring Revenue was 30.9% of Total Gaming Revenue for such period.

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for definitions of terms used in the above table.

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Gaming Segment, Service Revenue by Region

Set forth below is a breakdown of our Gaming service revenue by geographic region. Gaming service revenue consists principally of Gaming participation revenue, Gaming other fixed fee revenue, Gaming long term license amortization and Gaming other non-recurring revenue. See “— Gaming Segment Revenue” below for a discussion of gaming service revenue between the periods under review.

Gaming Service Revenue by Region

	For the Three-Month Period ended
(In millions)	Unaudited Mar 31, 2021		Unaudited Mar 31, 2020		Variance 2021 vs 2020			Total Functional Currency %			Total Variance %
Service Revenue:
UK LBO	$	0.6	$	7.3	$	(6.7	)		(92.3	)%		(91.8	)%
UK VAT - Related Income		3.1		-	$	3.1			n/a			n/a
UK Other		0.1		4.2		(4.1	)		(98.5	)%		(98.4	)%
Italy		0.1		0.8		(0.7	)		(89.5	)%		(88.8	)%
Greece		1.7		4.1		(2.4	)		(61.3	)%		(58.5	)%
Rest of the World		0.0		0.2		(0.2	)		(87.8	)%		(87.0	)%
Total service revenue	$	5.6	$	16.6	$	(11.0	)		(68.3)	%		(66.3	)%
Exchange Rate - $ to £		1.37		1.29

Note: Exchange rate in the table is calculated by dividing the USD total service revenue by the GBP total service revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

Gaming Segment, key events that affected results for the Three Months ended March 31, 2021

Total Gaming Customer Gross Win per unit per day (in our functional currency, GBP) decreased by £63.96, or 99.1% which was due to COVID-19 closures during 2021. Very limited operations in the UK and Colombia were in operation during the period. The majority of the UK estate, all Greece retail venues and all Italy retail venues were shut during the quarter ended March 31, 2021. The participation rate increased from 6.5% to 7.5% due to a number of UK customers in operation who contractually pay higher than average terms.

Inspired received VAT-related revenue of $3.1 million in January 2021 from a major UK customer. This payment has been recorded as revenue in our results.

During the period, Inspired sold 40 “Valor™” terminals to a number of customers in Illinois, increasing the total number of North American unit sales since launch in December 2019 to 469. Retail venues in Illinois were shut down during the quarter ended December 31, 2020 due to COVID-19, which negatively impacted sales during this period. As of February, all eleven regions in Illinois had reopened.

Inspired delivered our first sales to Western Canada Lottery Corporation (“WCLC”), our second jurisdiction in North America. Inspired recorded the sale of 100 “Valor™” terminals to WCLC during March 2021, providing revenue of $1.6 million.

Inspired furthered its relationship with a major customer in the Dutch market with the sale and delivery of an additional 206 “Analogue” terminals.

In the UK market, outright product sales of 75 “Flex” terminals were recorded with a major customer during the months of January and February. This installed base also carries a future recurring rental income.

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Three Months ended March 31, 2021 compared to Three Months ended March 31, 2020 – Gaming Segment

	For the Three-Month Period ended
(In millions)	Unaudited Mar 31,2021			Unaudited Mar 31, 2020			Variance 2021 vs 2020			Total Functional Currency %			Total Variance %
Revenue:
Service	$	5.6		$	16.6		$	(11.0	)		(68.3	)%		(66.3	)%
Product		5.2			8.3			(3.1	)		(42.4	)%		(37.5	)%
Total revenue		10.8			24.9			(14.1	)		(59.7	)%		(56.7	)%
Cost of sales, excluding depreciation and amortization:
Cost of service		(0.6	)		(4.3	)		3.7			(87.1	)%		(86.1	)%
Cost of product		(2.9	)		(5.4	)		2.5			(49.8	)%		(45.8	)%
Total cost of sales		(3.5	)		(9.7	)		6.2			(66.2	)%		(63.5	)%
Selling, general and administrative expenses		(4.1	)		(8.9	)		4.8			(56.6	)%		(53.6	)%
Stock-based compensation		(0.2	)		(0.1	)		(0.1	)		51.9	%		37.1	%
Depreciation and amortization		(6.6	)		(7.4	)		0.8			(17.0	)%		(11.2	)%
Net operating Income (Loss)	$	(3.6	)	$	(1.2	)	$	(2.5	)		182.6	%		209.6	%
Exchange Rate - $ to £		1.38			1.28

Note: Exchange rate in the table is calculated by dividing the USD total revenue by the GBP total revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

Gaming Segment Revenue

During the period, Gaming revenue decreased by $14.1 million, or 56.7%, to $10.8 million on a reported basis. On a functional currency (at constant rate) basis, Gaming revenue decreased by $14.8 million, or 59.7%. This was partially offset by favorable currency movements of $0.7 million.

Service revenue decreased by $11.0 million on a reported basis. On a functional currency (at constant rate) basis, Gaming Service revenue decreased by $11.3 million, or 68.3%, to $5.6 million. This was driven by a decline in UK (including Licensed Betting Offices (“LBO”) and UK other) sales of $10.9 million primarily driven by the COVID-19 closures during the period. Greece and Italy had revenue declines of $2.5 million and $0.7 million, respectively, driven by the COVID-19 closures. This was partially offset by favorable currency movements of $0.3 million.

Product revenue decreased by $3.1 million to $5.2 million on a reported basis. On a functional currency (at constant rate) basis, revenue decreased by $3.5 million, or 42.4%.

Gaming Segment Operating Income

Cost of sales (excluding depreciation and amortization) decreased by $6.2 million to $3.5 million on a reported basis, which included adverse currency movements of $0.3 million. On a functional currency (at constant rate) basis, Gaming cost of sales decreased by $6.4 million, or 66.2%. The reduction in cost of sales was driven by the corresponding reduction in revenue related to the COVID-19 closures.

SG&A expense declined by $4.8 million on a reported basis. This decrease included the impact of unfavorable currency movements of $0.3 million. On a functional currency (at constant rate) basis, Gaming SG&A decreased by $5.0 million, or 56.6%. This was driven by reduced staffing costs related to both staff reductions and reduced salaries implemented due to the COVID-19 closures as well as synergy and other cost savings.

Depreciation and amortization declined by $0.8 million on a reported basis, or 11.2%. This included the impact of unfavorable currency movements of $0.4 million. On a functional currency (at constant rate basis), Gaming depreciation and amortization decreased by $1.3 million, or 17.0%. This was driven by a decrease in UK LBO depreciation due to assets that have been fully written down.

Operating income decreased by $2.5 million on a reported basis, from a loss of $1.2 million to a loss of $3.6 million. This was primarily due to the COVID-19 closures and unfavorable currency movements of $0.2 million, partly offset by the VAT-related income.

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Three Months ended March 31, 2021 compared to Three Months ended March 31, 2020 – Virtual Sports Segment

We generate revenue from our Virtual Sports segment through the licensing of our products. We receive fees in exchange for the licensing of our products, typically on a long-term contract basis, on a participation basis. Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and other promotional costs and any relevant regulatory levies) from Virtual Sports content placed on our customers’ websites or in our customers’ facilities. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Virtual Sports segment is principally driven by the number of customers we have, the net win performance of the games and the net win percentage that we receive pursuant to our contracts with our customers.

Virtual Sports Segment, Key Performance Indicators

	For the Three-Month Period ended				Variance
	Unaudited Mar 31,		Unaudited Mar 31,		2021 vs 2020
Virtuals	2021		2020					%
No. of Live Customers at the end of the period		59		56		3			5.4	%
Average No. of Live Customers		59		56		3			5.4	%
Total Revenue (£’m)	£	4.6	£	6.1	£	(1.5	)		(24.5	)%
Total Revenue £’m - Retail	£	0.6	£	3.3	£	(2.7	)		(82	)%
Total Revenue £’m - Online Virtuals	£	4.0	£	2.7	£	1.3			46	%

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for definitions of terms used in the above table.

Virtual Sports Segment, Recurring Revenue

Set forth below is a breakdown of our Virtual Sports recurring revenue.

	For the Three-Month Period ended						Variance
	Unaudited Mar 31,			Unaudited Mar 31,			2021 vs 2020
(In £ millions)	2021			2020						%
Virtual Sports Recurring Revenue
Total Virtual Sports Revenue	£	4.6		£	6.1		£	(1.5	)		(24.5	)%
Recurring Revenue - Retail Virtuals	£	0.5		£	2.9		£	(2.4	)		(82.5	)%
Recurring Revenue - Online Virtuals	£	3.9		£	2.6		£	1.3			50.7	%
Total Virtual Sports Long term license amortization	£	0.2		£	0.4		£	(0.3	)		(62.7	)%
Total Virtual Sports Recurring Revenue	£	4.6		£	5.9		£	(1.3	)		(22.6	)%
Virtual Sports Recurring Revenue as a Percentage of Total Virtual Sports Revenue		100.0	%		97.5	%		2.5	%

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for definitions of terms used in the above table.

29

Virtual Sports Segment, key events that affected results for the Three Months ended March 31, 2021

During the three months ended March 31, 2021, our key retail territories, the United Kingdom, Ireland, Italy, Greece and Belgium were in full lockdown as a result of the COVID-19 closures. In the same quarter in the prior year only half of March 2020 was impacted by land-based closures. As a result, retail recurring revenues declined by $3.3 million which includes a positive currency impact of $0.2 million.

Online recurring growth of $1.8 million, or 50.7%, partially offset the decline in retail which includes an adverse currency impact of $0.1 million.

There was a further decline of $0.4 million from historical license fee amortization contracts reaching their expiration.

During the three months ended March 31, 2021, we launched two channels of our Matchday Soccer product with Sisal Sans in Turkey via our proprietary Virtual Plug & Play^{TM (“}VPP”) platform, which sits alongside the existing 11 channels of virtual sports. Since the launch of the Turkish and English Matchday leagues there has been a significant increase in GGR and in our market share.

In Poland we launched soccer and a mixed sports channel with Fortuna on 250 Self Service Betting Terminals (“SSBTs”) which complements our previously available over the counter offering.

V-Play Horses was launched with LT Game in Macau in Casino Kam Pek on the Electronic Table Game (“ETG”) terminals with regulatory approval received for a further roll out.

A new five-year contract for global distribution of Virtual Sports was signed with Entain, covering both retail and online channels across multiple jurisdictions.

A new agreement was signed with Stoiximan to provide scheduled virtual sports to customers in multiple jurisdictions, including Greece where Stoiximan is one of the leading operators.

A new agreement was signed with CAGE Sports to provide Virtual Sports to customers on both the retail and online channels in the Caribbean.

Three Months ended March 31, 2021 compared to Three Months ended March 31, 2020 – Virtual Sports Segment

	For the Three-Month Period ended
(In millions)	Unaudited Mar 31, 2021			Unaudited Mar 31, 2020			Variance 2021 vs 2020			Total Functional Currency %			Total Variance %
Service Revenue	$	6.3		$	7.8		$	(1.4	)		(24.5	)%		(18.6	)%
Cost of service		(0.3	)		(0.7	)		0.4			(60.1	)%		(57.3	)%
Selling, general and administrative expenses		(1.1	)		(1.2	)		0.1			(21.8	)%		(11.5	)%
Stock-based compensation		(0.1	)		(0.1	)		(0.0	)		22.0	%		31.4	%
Depreciation and amortization		(1.1	)		(0.8	)		(0.3	)		33.2	%		43.1	%
Net operating Income (Loss)	$	3.7		$	5.0		$	(1.3	)		(30.1	)%		(25.6	)%
Exchange Rate - $ to £		1.38			1.28

Note: Exchange rate in the table is calculated by dividing the USD service revenue by the GBP service revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

30

Virtual Sports Segment revenue.

During the period, revenue decreased by $1.4 million, or 18.6%, on a reported basis. This decrease included the impact of favorable currency movements of $0.5 million. On a functional currency (at constant rate) basis, revenue decreased by $1.9 million, or 24.5%. This decrease was driven by a $3.5 million decrease in retail revenue due to the COVID-19 closures. This decline was partially offset by growth in Online Virtuals of $1.6 million.

Virtual Sports Segment operating income.

Cost of Service decreased by $0.4 million to $0.3 million on a reported basis, with no impact from currency movements. This was driven by the decline in retail revenue, partly offset by the growth in Online Virtuals.

SG&A expenses decreased by $0.1 million on a reported basis. On a functional currency (at constant rate) basis, SG&A expenses decreased by $0.3 million, or 21.8%. This decrease was driven by staff-related cost savings from the COVID-19 closures related furlough scheme and reduction in staff salaries.

Depreciation and amortization decreased by $0.3 million on a reported and functional currency (at constant rate) basis.

Operating profit decreased by $1.3 million on a reported basis which included the impact of favorable currency movements of $0.2 million. On a functional currency (at constant rate) basis operating profit decreased by $1.5 million. This was primarily due to the decrease in revenues resulting from COVID-19 closures.

Three Months ended March 31, 2021 compared to Three Months ended March 31, 2020 – Interactive Segment

We generate revenue from our Interactive segment through the licensing of our products. We receive fees in exchange for the licensing of our products, typically on a long-term contract basis, on a participation basis. Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and other promotional costs and any relevant regulatory levies) from Interactive content placed on our customers’ websites. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Interactive segment is principally driven by the number of customers we have, the number of live games, the net win performance of the games and the net win percentage that we receive pursuant to our contracts with our customers.

Interactive Segment, Key Performance Indicators

	For the Three-Month Period ended				Variance
	Unaudited		Unaudited		2021 vs 2020
Interactive	Mar 31, 2021		Mar 31, 2020				%
No. of Live Customers at the end of the period		96		57		39		68	%
Average No. of Live Customers		93		55		37		67	%
No. of Live Games at the end of the period		209		181		28		15	%
Average No. of Live Games		206		176		30		17	%
Total Revenue (£’m)	£	3.7	£	1.7	£	2.1		124	%

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for definitions of terms used in the above table.

31

Interactive Segment, Recurring Revenue

Set forth below is a breakdown of our Interactive recurring revenue which consists principally of Interactive participation revenue. See “— Interactive Segment Revenue” below for a discussion of Interactive service revenue between the periods under review.

	For the Three-Month Period ended						Variance
	Unaudited			Unaudited			2021 vs 2020
(In £ millions)	Mar 31, 2021			Mar 31, 2020							%
Interactive Recurring Revenue
Total Interactive Revenue	£	3.7		£	1.7		£	2.1		124	%
Total Recurring Revenue - Interactive	£	3.7		£	1.7		£	2.1		124	%
Interactive Recurring Revenue as a Percentage of Total Interactive Revenue		100.0	%		100.0	%		0.0	%

Interactive Segment, key events that affected results for the Three Months ended March 31, 2021

During the three months ended March 31, 2021, the consistent launch of new content across the estate, growth in the customer base in new, emerging and core markets and increased promotional activity through exclusive deals with tier one customers were key drivers of performance. As a result, was a $3.1 million increase in revenue compared to the prior year including a positive currency impact of $0.4 million.

There were nine new brand launches including BetMGM in New Jersey, Gamesys and Interwetten. We also launched with our first new operators in Spain, Luckia and 888.

We deployed nine new games in the quarter across the estate including Vegas Cash Spins and Fruity Bonanza Scatterdrops both of which were developed with brand new game mechanics.

Three Months ended March 31, 2021 compared to Three Months ended March 31, 2020 – Interactive Segment

	For the Three-Month Period ended									Total Functional			Total
	Unaudited			Unaudited			Variance			Currency			Variance
(In millions)	Mar 31, 2021			Mar 31, 2020			2021 vs 2020			%			%
Service Revenue	$	5.2		$	2.1		$	3.1			124.9	%		143.2	%
Cost of service		(0.8	)		(0.2	)		(0.5	)		193.0	%		217.5	%
Selling, general and administrative expenses		(1.0	)		(1.2	)		0.1			(16.3	)%		(10.1	)%
Stock-based compensation		(0.1	)		(0.0	)		(0.0	)		51.1	%		103.5	%
Depreciation and amortization		(0.7	)		(0.6	)		(0.1	)		2.0	%		9.4	%
Net operating Income (Loss)	$	2.6		$	0.1		$	2.5			4247.3	%		4485.4	%
Exchange Rate - $ to £		1.38			1.28

Note: Exchange rate in the table is calculated by dividing the USD service revenue by the GBP service revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

Interactive Segment revenue

During the period, revenue increased by $3.1 million, or 143.2%, on a reported basis. On a functional currency (at constant rate) basis, revenue increased by $2.7 million, or 124.9%. This was driven by recurring revenue growth due to the increase in online demand attributable to the addition of new customers and territories, the consistent launch of quality content, as well as the introduction of the product to customers migrating online due to the COVID-19 closures.

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Interactive Segment operating income

Cost of Service increased by $0.5 million to $0.8 million on a reported and functional currency (at constant rate) basis, due to increased third party platform provider costs, in line with the significant revenue increase for the period.

SG&A expenses increased by $0.1 million on a reported basis. This increase included the impact of unfavorable currency movements of $0.1 million. On a functional currency (at constant rate) basis, SG&A increased by $0.2 million.

Depreciation and amortization increased by $0.1 million on a reported basis. On a functional currency (at constant rate) basis, depreciation and amortization was unchanged for the period versus prior year.

Operating profit increased by $2.5 million on a reported basis. On a functional currency (at constant rate) basis operating profit increased by $2.3 million. This was primarily due to the increase in revenue, partly offset by the increase in cost of sales.

Three Months ended March 31, 2021 compared to Three Months ended March 31, 2020 – Leisure Segment

We generate revenue from our Leisure segment through the rental of our gaming and amusement machines. We receive rental fees for machines, typically on a long-term contract basis, on both a participation and fixed fee basis, with our newer digital pub machines typically contracted on a fixed fee basis. Our participation contracts are typically structured to pay us a percentage of net win (defined as net revenue to our operator customers, after deducting player winnings, free bets or plays and any relevant regulatory levies) from gaming terminals placed in our customers’ facilities. Typically, we recognize revenue from these arrangements on a daily basis over the term of the contract.

Revenue growth for our Leisure segment is principally driven by the number of customers we have, the number of gaming machines in operation, the net win performance of the machines and the net win percentage that we receive pursuant to our contracts with our customers.

Leisure segment, Key Performance Indicators

	For the Three-Month Period ended				Variance
	Unaudited		Unaudited		2021 vs 2020
Leisure	Mar 31, 2021		Mar 31, 2020						%
End of period installed base Gaming machines (# of terminals)		11,610		12,269		(659	)	(5.4	)%
Average installed base Gaming machines (# of terminals)		11,631		12,276		(645	)	(5.3	)%
End of period installed base Other (# of terminals)		7,169		8,235		(1,066	)	(13	)%
Average installed base Other (# of terminals)		7,193		8,274		(1,081	)	(13	)%
Pub Digital Gaming Machines - Average installed base (# of terminals)		5,801		5,746		56		1.0	%
Pub Analogue Gaming Machines - Average installed base (# of terminals)		2,236		2,737		(502	)	(18	)%
MSA and Bingo Gaming Machines - Average installed base (# of terminals)(1)		3,338		3,510		(172	)	(4.9	)%
Inspired Leisure Revenue per Gaming Machine per week	£	0.1	£	53.6	£	(53.5	)	(100	)%
Inspired Pub Digital Revenue per Gaming Machine per week	£	0.0	£	60.2	£	(60.2	)	(100	)%
Inspired Pub Analogue Revenue per Gaming Machine per week	£	0.0	£	38.2	£	(38.2	)	(100	)%
Inspired MSA and Bingo Revenue per Gaming Machine per week	£	0.2	£	56.7	£	(56.4	)	(100	)%
Inspired Other Revenue per Machine per week	£	0.0	£	18.9	£	(18.9	)	(100	)%
Total Leisure Parks Revenue (Gaming and Non Gaming) (£’m)	£	0.0	£	1.6	£	(1.6	)	(100	%)

⁽¹⁾ Motorway Service Area machines

Please refer to our Annual Report on Form 10-K for the year ended December 31, 2020 for definitions of terms used in the above table.

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Leisure Segment, Recurring Revenue

Set forth below is a breakdown of our Leisure recurring revenue which consists principally of Leisure participation revenue and Leisure other fixed fee revenue. See “— Leisure Segment Revenue” below for a discussion of leisure service revenue between the periods under review.

Set forth below is a breakdown of our Leisure recurring revenue.

	For the Three-Month Period ended						Variance
	Unaudited			Unaudited			2021 vs 2020
(In £ millions)	Mar 31, 2021			Mar 31, 2020							%
Leisure Recurring Revenue
Total Leisure Revenue	£	0.4		£	13.6		£	(13.2	)	(97.1	)%
Total Leisure Recurring Revenue	£	0.0		£	12.6		£	(12.6	)	(100.0	)%
Leisure Recurring Revenue as a Percentage of Total Leisure Revenue		0.5	%		93.0	%		(92.6	)%

Leisure Segment, key events that affected results for the Three Months ended March 31, 2021

During the three months ended March 31, 2021, all major sectors of the Leisure segment (Pubs, Holiday Parks, Motoway Service Area’s and Bingo Halls) remained closed due to the COVID-19 closures in the UK.

Three Months ended March 31, 2021 compared to Three Months ended March 31, 2020 – Leisure Segment

	For the Three-Month Period ended									Total Functional			Total
(In millions)	Unaudited Mar 31, 2021			Unaudited Mar 31, 2020			Variance 2021 vs 2020			Currency %			Variance %
Revenue:
Service	$	0.0		$	16.3		$	(16.3	)		(100.0	)%		(100.0	)%
Product		0.5			1.2			(0.7	)		(57.9	)%		(55.6	)%
Total revenue		0.5			17.5			(17.0	)		(97.1	)%		(96.9	)%
Cost of sales, excluding depreciation and amortization:
Cost of service		(0.4	)		(3.3	)		2.8			(87.1	)%		(86.3	)%
Cost of product		(0.3	)		(0.8	)		0.6			(71.5	)%		(69.5	)%
Total cost of sales		(0.7	)		(4.1	)		3.4			(83.9	)%		(82.8	)%
Selling, general and administrative expenses		(3.2	)		(11.0	)		7.8			(73.1	)%		(71.0	)%
Stock-based compensation		(0.1	)		(0.0	)		(0.1	)		165.0	%		5308.1	%
Depreciation and amortization		(4.2	)		(3.4	)		(0.8	)		15.1	%		24.3	%
Net operating Income (Loss)		(7.7	)		(1.0	)	$	(6.6	)		530.3	%		647.4	%
Exchange Rate - $ to £		1.38			1.29

Note: Exchange rate in the table is calculated by dividing the USD total revenue by the GBP total revenue, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

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Leisure Segment Revenue

During the period, revenue decreased by $17.0 million, or 96.9%, to $0.5 million on a reported basis, with no impact from currency movements.

Service revenue decreased by $16.3 million on both a reported and functional currency (at constant rate) basis to nil. This was driven by the COVID-19 closures, with all of the major sectors of the Leisure segment being closed for the entire three months ended March 31, 2021.

Product revenue decreased by $0.7 million to $0.5 million on a reported and functional currency (at constant rate) basis. This decrease was driven by the COVID-19 closures.

Leisure Segment Operating Income

Cost of sales (excluding depreciation and amortization) decreased by $3.4 million to $0.7 million on reported and functional currency (at constant rate) basis.

Service cost of sales decreased by $2.8 million to $0.4 million on a reported and functional currency (at constant rate) basis, driven by the reduction in Service revenue due to the COVID-19 closures.

Product cost of sales decreased by $0.6 million to $0.3 million on a reported and functional currency (at constant rate) basis, driven by the reduction in Product revenue due to the COVID-19 closures.

SG&A expenses decreased by $7.8 million on a reported basis to $3.2 million, which included the impact of unfavorable currency movements of $0.3 million. On a functional currency (at constant rate) basis, SG&A expenses decreased by $8.1 million, or 73.1%. This was driven by reduced staffing costs related to both staff reductions and reduced salaries implemented due to the COVID-19 closures as well as synergy and other cost savings.

Depreciation and amortization increased by $0.8 million on a reported basis to $4.2 million. This included an impact of unfavorable currency movements of $0.3 million. On a functional currency (at constant rate basis), Leisure depreciation increased by $0.5 million or 15.1%.

Operating income decreased by $6.6 million on a reported basis from a loss of $1.0 million to a loss of $7.7 million, which included the impact of unfavorable currency movements of $0.6 million. On a functional currency (at constant rate) basis operating income decreased by $6.0 million. This was primarily due to the COVID-19 closures.

Non-GAAP Financial Measures

We use certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA, to analyze our operating performance. We use these financial measures to manage our business on a day-to-day basis. We believe that these measures are also commonly used in our industry to measure performance. For these reasons, we believe that these non-GAAP financial measures provide expanded insight into our business, in addition to standard U.S. GAAP financial measures. There are no specific rules or regulations for defining and using non-GAAP financial measures, and as a result the measures we use may not be comparable to measures used by other companies, even if they have similar labels. The presentation of non-GAAP financial information should not be considered in isolation from, or as a substitute for, or superior to, financial information prepared and presented in accordance with U.S. GAAP. You should consider our non-GAAP financial measures in conjunction with our U.S. GAAP financial measures.

We define our non-GAAP financial measures as follows:

EBITDA is defined as net loss excluding depreciation and amortization, interest expense, interest income and income tax expense.

Adjusted EBITDA is defined as net loss excluding depreciation and amortization, interest expense, interest income and income tax expense, and other additional exclusions and adjustments. Such additional excluded amounts include stock-based compensation U.S. GAAP charges where the associated liability is expected to be settled in stock, and changes in the value of earnout liabilities and income and expenditure in relation to legacy portions of the business (being those portions where trading no longer occurs) including closed defined benefit pension schemes. Additional adjustments are made for items considered outside the normal course of business, including (1) restructuring costs, which include charges attributable to employee severance, management changes, restructuring, dual running costs, costs related to facility closures and integration costs, (2) merger and acquisition costs and (3) gains or losses not in the ordinary course of business. This does not include any adjustments related to COVID-19.

35

We believe Adjusted EBITDA, when considered along with other performance measures, is a particularly useful performance measure, because it focuses on certain operating drivers of the business, including sales growth, operating costs, selling and administrative expense and other operating income and expense. We believe Adjusted EBITDA can provide a more complete understanding of our operating results and the trends to which we are subject, and an enhanced overall understanding of our financial performance and prospects for the future. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income or loss, because it does not take into account certain aspects of our operating performance (for example, it excludes non-recurring gains and losses which are not deemed to be a normal part of underlying business activities). Our use of Adjusted EBITDA may not be comparable to the use by other companies of similarly termed measures. Management compensates for these limitations by using Adjusted EBITDA as only one of several measures for evaluating our operating performance. In addition, capital expenditures, which affect depreciation and amortization, interest expense, and income tax benefit (expense), are evaluated separately by management.

Functional Currency at Constant rate. Currency impacts discussed have been calculated as the current-period average GBP: USD rate less the equivalent average rate in the prior period, multiplied by the current period amount in our functional currency (GBP). The remaining difference, referred to as functional currency at constant rate, is calculated as the difference in our functional currency, multiplied by the prior-period average GBP: USD rate, as a proxy for functional currency at constant rate movement.

Currency Movement represents the difference between the results in our reporting currency (USD) and the results on a functional currency (at constant rate) basis.

Reconciliations from net loss, as shown in our Consolidated Statements of Operations and Comprehensive Loss, to Adjusted EBITDA are shown below.

Reconciliation to Adjusted EBITDA

	For the Three-Month Period ended
	Unaudited			Unaudited
(In millions)	Mar 31, 2021			Mar 31, 2020
Net Income (loss)	$	(16.7	)	$	(9.8	)
Items Relating to Legacy Activities:
Pension charges (1)		0.2			0.2
Items outside the normal course of business:
Costs of group restructure (2)		-			0.1
Acquisition and integration related transaction expenses (3)		1.4			3.2
Impairment on interest in equity method investee(4)		-			0.7
Stock-based compensation expense		1.4			1.0
Depreciation and amortization		13.1			12.6
Interest Income		(0.0	)		(0.3	)
Interest Expense		8.6			6.1
Change in fair value of warrant liability		3.0			(7.6	)
Other finance expenses / (income)		(6.4	)		3.7
Income tax		(0.7	)		0.2
Adjusted EBITDA	$	3.9		$	10.1
Adjusted EBITDA	£	2.8		£	7.8
Exchange Rate - $ to £ (5)		1.37			1.28

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Reconciliation to Adjusted EBITDA by segment for the Three Months ended March 31, 2021

	For the Three-Month Period ended
(In millions)	Unaudited Mar 31, 2021
	Total			Gaming			Virtual Sports		Interactive		Leisure			Corporate
Net Income/ (loss)	$	(16.7	)	$	(3.6	)	$	3.7	$	2.6	$	(7.7	)	$	(11.7	)
Items Relating to Legacy Activities:
Pension charges (1)		0.2													0.2
Items outside the normal course of business:
Costs of group restructure (2)		-													-
Acquisition and integration related transaction expenses (3)		1.4													1.4
Impairment on interest in equity method investee(4)		-													-
Stock-based compensation expense		1.4			0.2			0.1		0.1		0.1			0.9
Depreciation and amortization		13.1			6.6			1.1		0.7		4.2			0.5
Interest Income		(0.0	)												(0.0	)
Interest Expense		8.6													8.6
Change in fair value of warrant liability		3.0													3.0
Other finance expenses / (income)		(6.4	)												(6.4	)
Income tax		(0.7	)												(0.7	)
Adjusted EBITDA	$	3.9		$	3.2		$	4.9	$	3.4	$	(3.4	)	$	(4.2	)
Adjusted EBITDA	£	2.8
Exchange Rate - $ to £ (5)		1.37

Note: Certain unallocated corporate function costs have not been allocated to the Company’s reportable operating segments because these costs are not allocable and to do so would not be practical, these are shown in the Corporate category.

37

Reconciliation to Adjusted EBITDA by segment for the Three Months ended March 31, 2020

	For the Three-Month Period ended
(In millions)	Unaudited Mar 31, 2020
	Total			Gaming			Virtual Sports		Interactive		Leisure			Corporate
Net Income/ (loss)	$	(9.8	)	$	(1.2	)	$	5.0	$	0.1	$	(1.0	)	$	(12.7	)
Items Relating to Legacy Activities:
Pension charges (1)		0.2													0.2
Items outside the normal course of business:
Costs of group restructure (2)		0.1													0.1
Acquisition and integration related transaction expenses (3)		3.2													3.2
Impairment on interest in equity method investee(4)		0.7													0.7
Stock-based compensation expense		1.0			0.1			0.1		0.0		0.0			0.8
Depreciation and amortization		12.6			7.4			0.8		0.6		3.4			0.4
Interest Income		(0.3	)												(0.3	)
Interest Expense		6.1													6.1
Change in fair value of warrant liability		(7.6	)												(7.6	)
Other finance expenses / (income)		3.7													3.7
Income tax		0.2													0.2
Adjusted EBITDA	$	10.1		$	6.3		$	5.9	$	0.7	$	2.4		($	5.2	)
Adjusted EBITDA	£	7.8
Exchange Rate - $ to £ (5)		1.28

Notes to Adjusted EBITDA reconciliation tables above:

(1) “Pension charges” are profit and loss charges included within selling, general and administrative expenses, relating to a defined benefit scheme which was closed to new entrants in 1999 and to future accrual in 2010. As well as the amortization of net loss, the figure also includes charges relating to the Pension Protection Fund (which were historically borne by the pension scheme) and a small amount of associated professional services expenses. These costs are included within Corporate Functions.

(2) “Costs of group restructure” include redundancy costs, Payments In Lieu of Notice costs, any associated employer taxes and costs associated with onerous property leases. To qualify as being an adjusting item, costs must be part of a large restructuring project, which will net save ongoing future costs. These costs were primarily incurred in connection with the property consolidation.

(3) Acquisition and integration related transaction expenses, Stock-based compensation expense, Depreciation and amortization, Total other expense, net and Income tax are as described above in the Results of Operations line item discussions. Total expense, net includes interest income, interest expense, change in fair value of earnout liability, change in fair value of derivative liability and other finance income.

(4) In April 2020, the Company disposed of its 40% non-controlling equity interest in Innov8 Gaming Limited which resulted in the investment of $0.7 million being written off.

(5) Exchange rate in the table is calculated by dividing the USD Adjusted EBITDA by the GBP Adjusted EBITDA, therefore this could be slightly different from the average rate during the period depending on timing of transactions.

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Liquidity and Capital Resources

Three Months ended March 31, 2021 compared to Three Months ended March 31, 2020

	3 Months ended						Variance
(in millions)	Mar 31,			Mar 31,
	2021			2020			2021 to 2020
Net loss	$	(16.7	)	$	(9.8	)	$	(6.9	)
Amortization of debt fees		1.3			0.5			0.8
Change in fair value of derivative and warrant liabilities and stock-based compensation expense		4.6			(6.2	)		10.8
Impairment expense		0.0			0.6			(0.6	)
Foreign currency translation on senior bank debt and cross currency swaps		(6.1	)		3.9			(10.0	)
Depreciation and amortization (incl RoU assets)		13.7			13.5			0.2
Other net cash generated by operating activities		1.2			8.6			(7.4	)
Net cash (used)/provided by operating activities		(2.0	)		11.1			(13.1	)
Net cash used in investing activities		(4.8	)		(11.0	)		6.2
Net cash (used)/generated by financing activities		(0.2	)		22.2			(22.4	)
Effect of exchange rates on cash		1.1			(2.9	)		4.0
Net (decrease)/increase in cash and cash equivalents	$	(5.9	)	$	19.4		$	(25.3	)

Net cash (used)/provided by operating activities.

For the three months ended March 31, 2021, net cash outflow provided by operating activities was $2.0 million, compared to a $11.1 million inflow for the three months ended March 31, 2020, representing a $13.1 million decrease in cash generation driven by COVID-19 related closures and interest expense timing differences resulting in payments of $6.8 million compared to $0.1 million in the prior period. In addition, a larger VAT payment made in the three months ended March 31, 2021 resulted in an $8.9 million higher outflow compared to the prior period.

Amortization of debt fees increased by $0.8 million to $1.3 million. The current and prior year’s non-cash interest expense related to amortization of debt fees incurred in relation to the business refinancing in October 2019.

Change in fair value of derivative and warrant liabilities and stock-based compensation expense increased by $10.8 million, from an outflow of $6.2 million to an inflow of $4.6 million. Movements in the fair valuation of warrant liabilities increased the inflow by $10.6 million and there was also a $0.4 million higher inflow relating to stock-based compensation expense in the three months ended March 31, 2021. These were offset by a $0.2 million movement relating to cross-currency swaps.

Foreign currency translation on senior bank debt and cross currency swaps resulted in a loss in the three months ended March 31, 2021 of $6.1 million as a result of the movement in exchange rates during the period, compared to a $3.9 million gain in the three months ended March 31, 2020.

Depreciation and amortization increased by $0.2 million to $13.7 million with increases of $1.1 million in development costs and licenses and $0.3 million in machine depreciation offset by a $0.8 million reduction in amortization of intangible assets and $0.4 million relating to the amortization of Right of Use assets under ASC 842.

39

Other net cash generated by operating activities decreased by $7.4 million, to a $1.2 million inflow following the significant impact in the current year of the COVID-19 closures. Movements in trading levels resulted in a $17.1 million benefit from accounts receivable ($5.4 million inflow in the three months ended March 31, 2021 compared to an $11.7 million outflow in the prior period) but this was offset by a $8.7 million outflow from accrued tax levels and a $7.1 million outflow from other creditors (driven by a $5.7 million interest accrual outflow through the different timing of debt interest payments). Further adverse movements were seen on deferred revenue creditors $3.8 million, other debtors and prepayments $2.0 million, accounts payable $2.0 million and inventory $0.6 million. Many of these movements were impacted by the COVID-19 closures in the three months ended March 31, 2021. However, throughout the period, management have actively managed our cash levels to seek to optimize our liquidity position.

Net cash used in investing activities.

Net cash used in investing activities decreased by $6.2 million to $4.8 million in the three months ended March 31, 2021, primarily due to minimal spend on capital as a result of the COVID-19 closures.

Net cash used by financing activities.

During the three months ended March 31, 2021, net cash used by financing activities was an outflow of $0.2 million, compared to a $22.2 million inflow in the three months ended March 31, 2020. The outflow in the three months ended March 31, 2021 was solely related to finance lease payments. In the three months ended March 31, 2020, an increase in the amount drawn on the revolver provided a $22.3 million inflow which was partly offset by a $0.1 million outflow relating to finance lease payments.

Funding Needs and Sources

To fund our obligations we have relied historically on a combination of cash flows provided by operations and the incurrence of additional debt or the refinancing of existing debt. As of March 31, 2021, we had liquidity of $41.2 million in cash and cash equivalents and a further $27.6 million of an undrawn revolver facility. This compares to $48.5 million of cash and cash equivalents as at March 31, 2020 but $24.8 million drawn on the revolver facility. We had a working capital inflow of $1.2 million for the three months ended March 31, 2021, compared to an $8.6 million inflow for the three months ended March 31, 2020. The level of our working capital surplus or deficit varies with the level of machine production we are undertaking and our capitalization as well as the seasonality evident in some of the businesses purchased as part of the NTG Acquisition. In periods with minimal machine volumes and capital spend, our working capital is more stable. In periods where significant numbers of machines are being produced, the levels of inventory and creditors are higher than typical and there is a natural timing difference between converting the stock into sellable or capitalized plant and settling payments to suppliers. These factors, along with movements in trading activity levels which have been seen during 2020 and 2021 following the COVID-19 closures, can result in significant working capital volatility. In periods of low activity, our working capital volatility is reduced. Working capital is reviewed and managed with the aim of ensuring that current liabilities are covered by the level of cash held and the expected level of short-term receipts.

Some of our business operations require cash to be held within the machines. As of March 31, 2021, $1.6 million of our $41.2 million of cash and cash equivalents were held as operational floats within the machines. In addition, we held a further $7.1 million of ring-fenced cash.

Management currently believes that despite the reduced trading levels caused by the COVID-19 closures, the Company’s cash balances on hand, cash flows expected to be generated from operations, and the ability to control and defer capital projects will be sufficient to fund the Company’s net cash requirements through May 2022.

40

Long Term and Other Debt

(In millions)	March 31, 2021						March 31, 2020
Cash held	£	29.9		$	41.2		£	39.1		$	48.5
Revolver drawn		0.0			0.0			(20.0	)		(24.8	)
Original principal senior debt		(225.1	)		(310.6	)		(219.6	)		(272.4	)
Cash interest accrued		(4.8	)		(6.7	)		(8.5	)		(10.6	)
Finance lease creditors		(1.5	)		(2.0	)		(0.0	)		(0.0	)
Total	£	(201.6	)	$	(278.1	)	£	(209.0	)	$	(259.2	)

See Note 13 Long Term and Other Debt of the Financial Statements for detail of the debts held during 2020 and 2021.

Debt Covenants

Under our debt facilities in place as of March 31, 2021 and March 31, 2020 we are subject to covenant testing at quarterly intervals. The covenant testing is set at the level of Inspired Entertainment Inc., the ultimate holding company, and consists of a test on Leverage (Consolidated Total Net Debt/Consolidated Pro Forma EBITDA) and a test on the level of capital expenditure. These are measured under U.S. GAAP. Leverage is to be tested at quarterly intervals commencing for the period ending June 30, 2020 and capital expenditure is tested annually commencing on December 31, 2019.

Prior to reaching our first leverage covenant test on June 30, 2020, the covenants were reset as a direct result of the COVID-19 closures and subsequent loss of trading as a result of government lockdowns in many key trading countries around the world. Formal agreement of the revised covenants was achieved on June 25, 2020.

There were no breaches of the debt covenants in the periods ended March 31, 2021 and March 31, 2020.

Liens and Encumbrances

As of March 31, 2021, our senior bank debt was secured by the imposition of a fixed and floating charge in favor of the lender over all the assets of the Company and certain of the Company’s subsidiaries.

Contractual Obligations

As of March 31, 2021, our contractual obligations were as follows:

			Less than						More than
Contractual Obligations (in millions)	Total		1 yr		1-3 years		3-5 years		5 yrs
Operating activities
Interest on long term debt	$	94.5	$	25.0	$	50.5	$	19.0	$	-
Financing activities
Senior bank debt - principal repayment		310.6		-		-		310.6		-
Finance lease payments		2.0		0.9		0.6		0.5		-
Operating lease payments		12.2		3.6		4.0		2.2		2.4
Interest on non-utilisation fees		2.0		0.5		1.1		0.4		-
Total	$	421.3	$	30.0	$	56.2	$	332.7	$	2.4

Off-Balance Sheet Arrangements

As of March 31, 2021, there were no off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, promulgated by the U.S. Securities and Exchange Commission.

41

Critical Accounting Policies

The preparation of our unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions. We exercise considerable judgment with respect to establishing sound accounting policies and in making estimates and assumptions that affect the reported amounts of our assets and liabilities, our recognition of revenue and expenses, and our disclosure of commitments and contingencies at the date of the consolidated financial statements. On an on-going basis, we evaluate our estimates and judgments. We base our estimates and judgments on a variety of factors, including our historical experience, knowledge of our business and industry and current and expected economic conditions, that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We periodically re-evaluate our estimates and assumptions with respect to these judgments and modify our approach when circumstances indicate that modifications are necessary. While we believe that the factors we evaluate provide us with a meaningful basis for establishing and applying sound accounting policies, we cannot guarantee that the results will always be accurate. Since the determination of these estimates requires the exercise of judgment, actual results could differ from such estimates.

For a discussion of other recently issued accounting standards, and assessments as to their impacts on the Company, see Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies, Note 1 to the consolidated financial statements included elsewhere in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our principal market risks are our exposure to changes in interest rates and foreign currency exchange rates.

Interest Rate Risk

We have external borrowings that are subject to the risk of higher interest charges associated with increases in interest rates. As of March 31, 2021, we had £145.8 million ($201.1 million) and €93.1 million ($109.5 million) of senior bank debt that is subject to a floating interest rate charge that can vary with the 3-month LIBOR and the 3-month EUROBOR rates. If the floating interest rates increased by 1%, the additional interest charge would be approximately $0.8 million. If the floating interest rates increased by 5%, the additional interest charge would be approximately $3.9 million.

The above additional interest charges do not consider the interest rate swaps that the Company has entered into in connection with the refinancing. These swaps, which are effective until October 1, 2023 cover approximately 2/3rds of the debt level and have been designed to negate the impact of any interest rate increases and should the interest rates move as above, then the actual additional interest charge would be significantly less than shown.

Foreign Currency Exchange Rate Risk

Our operations are conducted in various countries around the world and we receive revenue and pay expenses from these operations in a number of different currencies. As such, our earnings are subject to movements in foreign currency exchange rates when transactions are denominated in (i) currencies other than GBP, which is our functional currency, or (ii) the functional currencies of our subsidiaries, which is not necessarily GBP. Excluding intercompany balances, our Euro functional currency net liabilities total approximately $97.2 million and our US Dollar functional currency net liabilities total approximately $15.0 million. We use a sensitivity analysis model to measure the impact of a 10% adverse movement of foreign currency exchange rates against the US Dollar. A hypothetical 10% adverse change in the value of the Euro and the US Dollar relative to GBP as of March 31, 2021 would result in translation adjustments of approximately $8.3 million and $1.5 million, respectively, recorded in other comprehensive loss.

Included within our trading results are earnings outside of our functional currency. Retained losses earned in Euros and in US Dollars in the three months ended March 31, 2021 were €0.3 million and $5.5 million, respectively. A hypothetical 10% adverse change in the value of the Euro and the US Dollar relative to GBP as of March 31, 2021 would result in translation adjustments of approximately $0.0million and $0.5 million, respectively, recorded in trading operations.

The majority of the Company’s trading is in GBP, the functional currency, although the reporting currency of the Company is the US Dollar. As such, changes in the GBP:USD exchange rate have an effect on the Company’s results. A 10% weakening of GBP against the US Dollar would change the trading operational results by approximately $0.7 million and would result in translation adjustments of approximately $0.3 million, recorded in other comprehensive loss.

For further information regarding the new external borrowings, see Note 4 to the Consolidated Financial Statements, “Long Term and Other Debt”.

42

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer (together, the “Certifying Officers”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2021 due to the material weakness described in Item 9A of Amendment No. 1 to the Annual Report on Form 10-K/A filed with the SEC on May 10, 2021. Management have implemented additional controls designed to remediate this material weakness; however, these controls have not operated effectively over a sufficient period of time in order to conclude that the material weakness has been fully remediated.

Notwithstanding the identified material weakness and management’s assessment that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2021, management believes that the interim consolidated financial statements and footnote disclosures included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations, cash flows and disclosures as of and for the periods presented in accordance with generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in lawsuits and legal proceedings arising in the ordinary course of business. While we believe that, currently, we have no such matters that are material, there can be no assurance that existing or new matters arising in the ordinary course of business will not have a material adverse effect on our business, financial condition or results of operations.

ITEM 1A. RISK FACTORS

You should carefully consider the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and Amendment No. 1 thereto, which could materially affect our business, financial position and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

43

ITEM 6. EXHIBITS

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Exhibit Number	Description
10.1*#	Letter dated April 12, 2021 to A. Lorne Weil.
31.1*	Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2*	Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1**	Certification of Principal Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2**	Certification of Principal Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase
101.DEF*	XBRL Taxonomy Extension Definition Linkbase
101.LAB*	XBRL Taxonomy Extension Label Linkbase
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase

# Indicates management contract or compensatory plan.

* Filed herewith.

** Furnished herewith.

44

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INSPIRED ENTERTAINMENT, INC.
Date: May 14, 2021	/s/ A. Lorne Weil
	Name:	A. Lorne Weil
	Title:	Executive Chairman
		(Principal Executive Officer)
Date: May 14, 2021	/s/ Stewart F.B. Baker
	Name:	Stewart F.B. Baker
	Title:	Executive Vice President and
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

45

EX-10.1

Exhibit 10.1

April 12, 2021

Dear Lorne:

Re: Employment Agreement dated October 9, 2020 (“Employment Agreement”)

We refer to your Employment Agreement and the Special Long-Term Equity Grant set out in Section 6.a2 thereof. We are writing to clarify the settlement position of the Special Long-Term Equity Grant.

As described in the Employment Agreement, the share allotment for the Special Long-Term Equity Grant, consisting of 750,000 RSUs, is subject to the approval by the stockholders of the Company at the future Annual Meeting of Stockholders to be held in 2021. The Special Long-Term Equity Grant is being made under the Inspired Entertainment, Inc. 2021 Omnibus Incentive Plan (the “2021 Plan”), which is also subject to approval by the stockholders of the Company at the future Annual Meeting of Stockholders to be held in 2021.

Pursuant to the terms of the 2021 Plan, each vested RSU awarded pursuant to Section 6.a2 of the Employment Agreement (whether Time Based RSUs under Section 6.a2.i, Adjusted EBITDA Based RSUs under Section 6.a2.ii, or Stock Price Based RSUs under Section 6.a2.iii) shall be settled on the earliest to occur of: (A) termination of service for any reason, provided that such termination constitutes a “separation from service” under Section 409A of the Code, (B) death, (C) termination of service on account of Disability, and (D) a Change in Control, in each case as defined in the 2021 Plan.

	INSPIRED ENTERTAINMENT, INC.
	By:	/s/ Carys Damon
	Its:	General Counsel
Accepted:
/s/ A. Lorne Weil	Date:	April 12, 2021
A. Lorne Weil

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, A. Lorne Weil, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Inspired Entertainment, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: May 14, 2021	/s/ A. Lorne Weil
	A. Lorne Weil
	Executive Chairman
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Stewart F.B. Baker, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Inspired Entertainment, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. 

Date: May 14, 2021	/s/ Stewart F.B. Baker
	Stewart F.B. Baker
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Inspired Entertainment, Inc. (the “Company”) on Form 10-Q for the fiscal period ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”), I, A. Lorne Weil, Executive Chairman of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

Dated: May 14, 2021	By:	/s/ A. Lorne Weil
		A. Lorne Weil

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Inspired Entertainment, Inc. (the “Company”) on Form 10-Q for the fiscal period ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Report”), I, Stewart F.B. Baker, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 

Dated: May 14, 2021	By:	/s/ Stewart F.B. Baker
		Stewart F.B. Baker

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2021	May 12, 2021
Cover [Abstract]
Entity Registrant Name	Inspired Entertainment, Inc.
Entity Central Index Key	0001615063
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		23,218,323
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2021

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Assets
Cash	$ 41,200	$ 47,100
Accounts receivable, net	21,000	27,500
Inventory, net	17,100	17,600
Prepaid expenses and other current assets	13,300	16,800
Total current assets	92,600	109,000
Property and equipment, net	61,800	65,500
Software development costs, net	39,700	42,400
Other acquired intangible assets subject to amortization, net	7,500	7,700
Goodwill	84,700	83,700
Right of use asset	12,000	12,500
Other assets	2,700	3,300
Total assets	301,000	324,100
Current liabilities
Accounts payable	21,100	17,900
Accrued expenses	32,100	31,400
Corporate tax and other current taxes payable	5,800	14,400
Deferred revenue, current	9,300	11,500
Operating lease liabilities	3,600	3,600
Other current liabilities	2,400	2,500
Warrant liability	16,000	13,000
Current portion of finance lease liabilities	900	600
Total current liabilities	91,200	94,900
Long-term debt	295,900	297,500
Finance lease liabilities, net of current portion	1,100	200
Deferred revenue, net of current portion	9,200	11,400
Derivative liability	1,100	1,700
Operating lease liabilities	8,600	9,200
Other long-term liabilities	6,300	10,900
Total liabilities	413,400	425,800
Commitments and contingencies
Stockholders' deficit
Preferred stock; $0.0001 par value; 1,000,000 shares authorized
Common stock; $0.0001 par value; 49,000,000 shares authorized; 22,594,207 shares and 22,430,475 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
Additional paid in capital	326,000	324,600
Accumulated other comprehensive income	35,700	31,100
Accumulated deficit	(474,100)	(457,400)
Total stockholders' deficit	(112,400)	(101,700)
Total liabilities and stockholders' deficit	$ 301,000	$ 324,100

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	1,000,000	1,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	49,000,000	49,000,000
Common stock, shares issued	22,594,207	22,430,475
Common stock, shares outstanding	22,594,207	22,430,475

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Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenue:
Total revenue	$ 22,800	$ 52,300
Cost of sales, excluding depreciation and amortization:
Cost of service	(2,100)	(8,500)
Cost of product sales	(3,200)	(6,200)
Selling, general and administrative expenses	(15,200)	(29,000)
Acquisition and integration related transaction expenses	(1,400)	(3,200)
Depreciation and amortization	(13,100)	(12,600)
Net operating loss	(12,200)	(7,200)
Other expense
Interest income		300
Interest expense	(8,600)	(6,100)
Change in fair value of warrant liability	(3,000)	7,600
Loss from equity method investee		(500)
Other finance income (expense)	6,400	(3,700)
Total other expense, net	(5,200)	(2,400)
Loss before income taxes	(17,400)	(9,600)
Income tax benefit (expense)	700	(200)
Net loss	(16,700)	(9,800)
Other comprehensive income/(loss):
Foreign currency translation (loss) gain	(1,100)	3,100
Change in fair value of hedging instrument	600	(1,500)
Reclassification of gain on hedging instrument to comprehensive income	500	400
Actuarial gains on pension plan	4,600	4,400
Other comprehensive income/(loss)	4,600	6,400
Comprehensive loss	$ (12,100)	$ (3,400)
Net loss per common share - basic and diluted	$ (.74)	$ (.44)
Weighted average number of shares outstanding during the period - basic and diluted	22,584,609	22,384,268
Supplemental disclosure of stock-based compensation expense
Stock-based compensation included in: Selling, general and administrative expenses	$ (1,400)	$ (1,000)
Service [Member]
Revenue:
Total revenue	17,100	42,800
Product Sales [Member]
Revenue:
Total revenue	$ 5,700	$ 9,500

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Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2019		$ 320,600	$ 45,100	$ (425,000)	$ (59,300)
Balance, shares at Dec. 31, 2019	22,230,768
Foreign currency translation adjustments			3,100		3,100
Actuarial gains on pension plan			4,400		4,400
Change in fair value of hedging instrument			(1,500)		(1,500)
Reclassification of gain (loss) on hedging instrument to comprehensive income			400		400
Shares issued upon net settlement of RSUs
Shares issued upon net settlement of RSUs, shares	166,959
Stock-based compensation expense		1,000			1,000
Net loss				(9,800)	(9,800)
Balance at Mar. 31, 2020		321,600	51,500	(434,800)	(61,700)
Balance, shares at Mar. 31, 2020	22,397,727
Balance at Dec. 31, 2020		324,600	31,100	(457,400)	(101,700)
Balance, shares at Dec. 31, 2020	22,430,475
Foreign currency translation adjustments			(1,100)		(1,100)
Actuarial gains on pension plan			4,600		4,600
Change in fair value of hedging instrument			600		600
Reclassification of gain (loss) on hedging instrument to comprehensive income			500		500
Shares issued upon net settlement of RSUs
Shares issued upon net settlement of RSUs, shares	163,732
Stock-based compensation expense		1,400			1,400
Net loss				(16,700)	(16,700)
Balance at Mar. 31, 2021		$ 326,000	$ 35,700	$ (474,100)	$ (112,400)
Balance, shares at Mar. 31, 2021	22,594,207

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from operating activities:
Net loss	$ (16,700)	$ (9,800)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	13,100	12,600
Amortization of right of use asset	600	900
Stock-based compensation expense	1,400	1,000
Impairment of investment in equity method investee		700
Foreign currency translation on senior bank debt	(6,100)	3,900
Change in fair value of warrant liability	3,000	(7,600)
Reclassification of loss on hedging instrument to comprehensive income	200	400
Non-cash interest expense relating to senior debt	1,300	500
Changes in assets and liabilities:
Accounts receivable	6,700	(10,000)
Inventory	700	1,300
Prepaid expenses and other assets	4,300	5,700
Corporate tax and other current taxes payable	(8,600)	100
Accounts payable	3,000	4,900
Deferred revenues and customer prepayment	(4,500)	(500)
Accrued expenses	400	7,500
Operating lease liabilities	(700)	(800)
Other long-term liabilities	(100)	300
Net cash (used in) provided by operating activities	(2,000)	11,100
Cash flows from investing activities:
Purchases of property and equipment	(2,000)	(8,400)
Disposals of property and equipment		1,000
Purchases of capital software	(2,800)	(3,600)
Net cash used in investing activities	(4,800)	(11,000)
Cash flows from financing activities:
Proceeds from issuance of revolver		22,300
Repayments of finance leases	(200)	(100)
Net cash (used in) provided by financing activities	(200)	22,200
Effect of exchange rate changes on cash	1,100	(2,900)
Net (decrease) increase in cash	(5,900)	19,400
Cash, beginning of period	47,100	29,100
Cash, end of period	41,200	48,500
Supplemental cash flow disclosures
Cash paid during the period for interest	6,800	100
Cash paid during the period for income taxes
Cash paid during the period for operating leases	300	1,000
Supplemental disclosure of noncash investing and financing activities
Property and equipment acquired through finance lease	1,300
Lease liabilities arising from obtaining right of use assets		(900)
Adjustment to goodwill arising from adjustment to fair value of assets acquired		$ (300)

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Nature of Operations, Management's Plans and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations, Management's Plans and Summary of Significant Accounting Policies

1. Nature of Operations, Management’s Plans and Summary of Significant Accounting Policies

Company Description and Nature of Operations

We are a global gaming technology company, supplying content, platform and other products and services to online and land-based regulated lottery, betting and gaming operators worldwide through a broad range of distribution channels, predominantly on a business-to-business basis. We provide end-to-end digital gaming solutions (i) on our own proprietary and secure network, which accommodates a wide range of devices, including land-based gaming machine terminals, mobile devices and online computer applications and (ii) through third party networks. Our content and other products can be found through the consumer-facing portals of our interactive customers and, through our land-based customers, in licensed betting offices, adult gaming centers, pubs, bingo halls, airports, motorway service areas and leisure parks.

Management Liquidity Plans

As of March 31, 2021, the Company’s cash on hand was $41.2 million, and the Company had working capital of $1.4 million. The Company recorded net losses of $16.4 million and $10.2 million for the three months ended March 31, 2021 and 2020, respectively. Net losses include excess depreciation and amortization over capital expenditure of $8.3 million and $0.6 million for the three months ended March 31, 2021, and 2020, respectively, non-cash stock-based compensation of $1.4 million and $1.0 million for the three months ended March 31, 2021 and 2020, respectively, and non-cash changes in fair value of warrant liability of $3.0 million loss and $7.6 million income for the three months ended March 31, 2021 and 2020, respectively. Historically, the Company has generally had positive cash flows from operating activities and has relied on a combination of cash flows provided by operations and the incurrence of debt and/or the refinancing of existing debt to fund its obligations. Cash flows used in operations amounted to $2.0 million and $11.1 million provided by operations for the three months ended March 31, 2021 and 2020, respectively with the change year on year due to land based operations being subject to full lockdown restrictions for the three months ended March 31, 2021. Working capital of $1.4 million includes a non-cash settled item of $9.3 million of deferred income, and an item not expected to be cash settled of $16.0 million comprising a warrant liability. Management currently believes that, absent any unanticipated COVID-19 impact (see below), the Company’s cash balances on hand, cash flows expected to be generated from operations, ability to control and defer capital projects and amounts available from the Company’s external borrowings will be sufficient to fund the Company’s net cash requirements through May 2022.

Our business continues to be adversely affected by the continuing nature of the COVID-19 pandemic. Due to the fluidity with which the situation continues to develop, we are not able at this time to estimate the extent of the impact of the COVID-19 pandemic on our financial results and operations in future periods. The long-term impacts of the pandemic on the global economy, trade relations, consumer behavior, our industry and our business operations remain unknown, however the vaccination programme in the UK began on December 8, 2020, and as of the date of this report, whilst the majority of retail venues in Italy and Greece are closed, the UK is poised to re-open retail venues from May 17, 2021, and the vaccination programme in the UK remains on schedule.

As a result of the significant reductions in revenue and other changes to our business, at least in the short term (which also affects other companies in our industry), we continue to protect our existing available liquidity by pro-actively managing capital expenditures and working capital as well as identifying both immediate and longer term opportunities for cost savings.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2020 and 2019. The financial information as of December 31, 2020 is derived from the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2021 (“the Original 10-K”), and as amended and filed on Form 10-K/A with the SEC on May 10, 2021 (“the 10-K/A”). The interim results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.

Restatement of Previously Reported Information

On May 7, 2021, after consultation with Marcum LLP, the Company’s independent registered public accounting firm, the Company’s management and the audit committee of the Company’s Board of Directors concluded that it was appropriate to restate the Company’s previously issued audited financial statements as of December 31, 2020, and December 31, 2019, and for the years ended December 31, 2020, and December 31, 2019, which were included in the Original 10-K.

The restatement related to the SEC’s public statement released on April 12, 2021, informing market participants that warrants issued by special purpose acquisition companies may require classification as a liability of the entity measured at fair value, with changes in fair value each period reported in earnings.

The effect of the restatement on previously reported information for the three months ended March 31, 2020 is as follows:

	As Previously Reported			Adjustments			As Restated
	(in millions, except per share data)
Consolidated Statements of Stockholders’ Deficit as of January 1, 2020
Additional paid in capital	$	346.6		$	(26.0	)	$	320.6
Accumulated deficit		(441.2	)		16.2			(425.0	)
Consolidated Statement of Operations and Comprehensive Loss for the three months ended March 31, 2020
Change in fair value of warrant liability	$	—		$	7.6		$	7.6
Net loss		(17.4	)		7.6			(9.8	)
Comprehensive loss		(11.0	)		7.6			(3.4	)
Net loss per common share – basic and diluted	$	(0.78	)	$	0.34		$	(0.44	)
Consolidated Statements of Stockholders’ Deficit as of March 31, 2020
Additional paid in capital	$	347.6		$	(26.0	)	$	321.6
Accumulated deficit		(458.6	)		23.8			(434.8	)

Recharacterization of Previously Reported Information

In prior years, and up to and including the interim period nine months ended September 30, 2020, the Company operated its business along three operating segments: Server Based Gaming, Virtual Sports (which included Interactive) and Acquired Businesses. During the period subsequent to September 30, 2020, the Company completed the process of changing its internal structure, which has been ongoing since the NTG Acquisition, and as a result changed the composition of its operating segments. The Company now operates its business along four operating segments, which are segregated on the basis of revenue stream: Gaming, Virtual Sports, Interactive and Leisure. The Company believes this method of segment reporting reflects both the way its business segments are now managed and the way the performance of each segment is now evaluated.

As part of the recharacterization exercise, certain items of Revenue, Cost of Sales and Selling, General and Administrative Expenses have been recharacterized to ensure consistency with similar items across the Group. The revenue recharacterizations are to ensure spares and similar items are reflected with other items of hardware (Product Sales). The resulting impact on previously reported information for the three months ended March 31, 2020 is as follows: Service Revenue, previously reported $43.2 million, now $42.8 million; Product Sales Revenue, previously reported $9.1 million, now $9.5 million; Cost of Service, previously reported $6.6 million, now $8.5 million; Cost of Product Sales, previously reported $7.0 million, now $6.2 million; Selling, General and Administrative Expenses (excluding Stock-based compensation), previously reported $29.1 million, now $28.0 million. The recharacterization has no impact on the previously reported Net Operating Loss, Net Loss or Net Comprehensive Loss for the three months ended March 31, 2020.

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Inventory

3 Months Ended

Mar. 31, 2021

Inventory Disclosure [Abstract]

Inventory

2. Inventory

Inventory consists of the following:

	March 31, 2021		December 31, 2020
	(in millions)
Component parts	$	11.5	$	12.1
Work in progress		1.8		1.7
Finished goods		3.8		3.8
Total inventories	$	17.1	$	17.6

Component parts include parts for gaming terminals. Included in component parts are reserves for excess and slow-moving inventory of $1.8 million and $1.5 million as of March 31, 2021 and December 31, 2020, respectively. Our finished goods inventory primarily consists of gaming terminals which are ready for sale.

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Contract Liabilities and Other Disclosures

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Contract Liabilities and Other Disclosures

3. Contract Liabilities and Other Disclosures

The following table summarizes contract related balances:

	Accounts Receivable		Unbilled Accounts Receivable		Deferred Income			Customer Prepayments and Deposits
	(in millions)
At March 31, 2021	$	23.8	$	5.0	$	(18.5	)	$	(1.8	)
At December 31, 2020	$	30.4	$	8.2	$	(22.9	)	$	(1.6	)
At December 31, 2019	$	24.5	$	15.3	$	(27.8	)	$	(1.9	)

Revenue recognized that was included in the deferred income balance at the beginning of the period amounted to $3.9 million and $10.3 million for the three months ended March 31, 2021 and the year ended December 31, 2020, respectively.

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Derivatives and Hedging Activities

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

4. Derivatives and Hedging Activities

On January 15, 2020, the Company entered into two interest rate swaps with UBS AG designed to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows on a portion of the current floating rate debt facilities. The swaps fix the variable interest rate of the current debt facilities and provide protection over potential interest rate increases by providing a fixed rate of interest payment in return. These interest rate swaps are for £95 million ($131.1 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and for €60 million ($70.5 million) at a fixed rate of 0.102% based on the 6 month EURIBOR rate and are effective until maturity on October 1, 2023.

Hedges of Multiple Risks

The Company’s objectives in using interest rate derivatives are to add stability to interest and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $1.5 million will be reclassified as an increase to interest expense.

As of March 31, 2021, and December 31, 2020, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivative	Number of Instruments	Notional
Interest rate swaps	2	£95 million ($131.1 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and €60 million ($70.5 million) at a fixed rate of 0.102% based on the 6 month EURIBOR rate

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheet as of March 31, 2021.

	Balance Sheet Classification		Asset Derivatives Fair Value		Balance Sheet Classification	Liability Derivatives Fair Value
			(in millions)			(in millions)
Derivatives designated as hedging instruments:
Interest Rate Products		Fair Value of Hedging Instruments	$	—	Derivative Liability	$	(1.7	)
Total derivatives designated as hedging instruments			$	—		$	(1.7	)

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheet as of December 31, 2020.

	Balance Sheet Classification		Asset Derivatives Fair Value		Balance Sheet Classification	Liability Derivatives Fair Value
			(in millions)			(in millions)
Derivatives designated as hedging instruments:
Interest Rate Products		Fair Value of Hedging Instruments	$	—	Other Current Liabilities and Long Term Derivative Liability	$	(2.6	)
Total derivatives designated as hedging instruments			$	—		$	(2.6	)

The table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the three months ended March 31, 2021.

	Amount of Gain/(Loss) Recognized in Other Comprehensive Income on Derivative			Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income
	(in millions)			(in millions)
Interest Rate Products	$	0.6	Interest Expense	$	(0.5	)
Total	$	0.6		$	(0.5	)

The table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the three months ended March 31, 2020.

	Amount of Gain Recognized in Other Comprehensive Income on Derivative				Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income
	(in millions)				(in millions)
Interest Rate Products	$	(1.5	)	Interest Expense	$	(0.4	)
Total	$	(1.5	)		$	(0.4	)

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2021.

	Interest Expense
	(in millions)
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$	8.6
Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$	(0.5	)

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2020.

	Interest Expense
	(in millions)
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$	6.1
Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$	(0.4	)

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2021 and December 31, 2020. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the consolidated balance sheet.

The ISDA Master Agreement between Gaming Acquisitions Limited, a wholly-owned subsidiary of the Company, and UBS AG is documented using the 2002 Form and the ISDA standard set-off provision in Section 6(f) of the ISDA Master Agreement apply to both parties and is only modified to include Affiliates of the Payee. There is no CSA and thus there is no collateral posting.

Offsetting of Derivative Assets

March 31, 2021

Gross Amounts Not Offset in the Statement of Financial Position

Gross Amounts of Recognized Assets

Gross Amounts Offset in the Statement of Financial Position

Net Amounts of Assets presented in the Statement of Financial Position

Financial Instruments

Cash Collateral Received

Net Amount

(in millions)

Fair value of hedging instrument

$

—

$

—

$

—

$

—

$

—

$

—

Offsetting of Derivative Liabilities
March 31, 2021
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
	(in millions)
Fair value of hedging instrument	$	1.7	$	—	$	1.7	$	—	$	—	$	—

Offsetting of Derivative Assets

December 31, 2020

Gross Amounts Not Offset in the Statement of Financial Position

Gross Amounts of Recognized Assets

Gross Amounts Offset in the Statement of Financial Position

Net Amounts of Assets presented in the Statement of Financial Position

Financial Instruments

Cash Collateral Received

Net Amount

(in millions)

Fair value of hedging instrument

$

—

$

—

$

—

$

—

$

—

$

—

Offsetting of Derivative Liabilities
December 31, 2020
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
	(in millions)
Fair value of hedging instrument	$	2.6	$	—	$	2.6	$	—	$	—	$	—

Credit-risk-related Contingent Features

The Company has entered into an industry standard ISDA Master Agreement, with a negotiated Scheduled thereto (the “ISDA Agreement”), with the counterparty to its derivative transactions and which ISDA Agreement sets forth various provisions which govern the trading relationship between the Company and its counterparty. Such provisions include certain events which, if triggered by either party, may give rise to an acceleration of the ISDA Agreement, thus triggering the exchange of a breakage payment between the parties.

The ISDA Agreement with the Company’s derivative counterparty contains a provision where the Company could be declared in default on its derivative obligations if, among others, its repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. The ISDA Agreement can also be accelerated if Lucid Trustee Services Limited requests or requires that the lender terminates or closes-out any Transaction under the ISDA Agreement pursuant to Clause 4.10 of the Intercreditor Agreement between primarily the Company, Lucid Agency Services as Senior Agent and Lucid Trustee Services Limited as Security Agent; in the event of certain refinancing circumstances; and in the event of certain reductions in the principal with respect to amounts loaned under the Senior Facilities Agreement.

As of March 31, 2021, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to the ISDA Agreements was $1.7 million. As of March 31, 2021, the Company has not posted any collateral related to the ISDA Agreement, as no collateral is required under the terms of such ISDA Agreement. If the Company had breached any of the provision under the ISDA Agreement which resulted in an acceleration of the ISDA Agreement at March 31, 2021, it could have been required to settle its obligations under the ISDA Agreement at its termination value of $2.5 million

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Fair Value Measurements

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

5. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset and liability in an orderly transaction between market participants at the measurement date. We estimate the fair value of our assets and liabilities utilizing an established three-level hierarchy. The hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date as follows:

Level 1:	Quoted prices in active markets for identical assets or liabilities.
Level 2:	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 2 inputs also include non-binding market consensus prices that can be corroborated with observable market data, as well as quoted prices that were adjusted for security-specific restrictions.
Level 3:	Unobservable inputs that are supported by little or no market activity that are significant to the fair value of the asset or liability. Level 3 inputs also include non-binding market consensus prices or non-binding broker quotes that are unable to be corroborated with observable market data.

The fair value of our financial assets and liabilities is determined by reference to market data and other valuation techniques as appropriate. We believe the fair value of our financial instruments approximates their recorded values.

For each period, derivative financial instrument assets and liabilities measured at fair value on a recurring basis are included in the financial statements as per the table below.

		March 31,		December 31,
	Level	2021		2020
		(in millions)
Public Warrants (included in warrant liability)	1	$	4.3	$	3.2
Long term receivable (included in other assets)	2	$	1.3	$	1.4
Private Placement Warrants (included in warrant liability)	2	$	11.7	$	9.8
Derivative liability (see Note 4)	2	$	1.7	$	2.6

Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s principal financial officer, who reports to the principal executive officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Principal Financial Officer and approved by the Principal Executive Officer.

At March 31, 2021 and December 31, 2020, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

6. Stock-Based Compensation

The Company’s stock-based compensation plans authorize awards of restricted stock units (“RSUs”), stock options and other equity-related awards. The Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”) was approved by stockholders in May 2019 and is the successor to the Company’s 2016 Long-Term Incentive Plan and the Second Long-Term Incentive Plan (collectively, the “Prior Plans”). The balances available for awards under the Prior Plans were terminated in connection with approval of the 2018 Plan; although outstanding awards under the Prior Plans remain governed by the terms of the Prior Plans, no new awards may be granted or become available for grant under the Prior Plans. See Note 17 “Subsequent Events” below regarding the Company’s adoption of the 2021 Omnibus Incentive Plan on April 12, 2021 which was approved by our stockholders on May 11, 2021.

As of March 31, 2021, there were (i) 1,777,611 shares subject to outstanding awards under the 2018 Plan, including 75,000 shares subject to performance-based target awards and 259,300 shares subject to awards that were previously subject to performance criteria that were determined to have been met for the applicable performance year which awards continue to remain subject to a time-based vesting schedule; and (ii) 2,411,319 shares subject to outstanding awards under the Prior Plans, including 1,092,633 shares subject to market-price vesting conditions that have a satisfaction deadline of December 23, 2021. As of March 31, 2021, there were 221,799 shares available for new awards under the 2018 Plan and no shares available for new awards under the Prior Plans. All awards consist of RSUs and Restricted Stock.

The Company also has an employee stock purchase plan (“ESPP”) that authorizes the issuance of up to an aggregate of 500,000 shares of common stock pursuant to purchases thereunder by employees. The ESPP, which was approved by stockholders in July 2017, is administered by the Compensation Committee which has discretion to designate the length of offering periods and other terms subject to the requirements of the ESPP. As of March 31, 2021, a total of 467,751 shares remain available for purchase under the ESPP.

A summary of the Company’s RSU activity during the three months ended March 31, 2021 is as follows:

	Number of Shares
Unvested Outstanding at January 1, 2021		2,149,118
Granted		59,466
Forfeited		(13,954	)
Vested		(11,418	)
Unvested Outstanding at March 31, 2021		2,183,212

The Company issued a total of 163,732 shares during the three months ended March 31, 2021 in connection with the net settlement of RSUs that vested on December 31, 2020.

Stock-based compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. For performance awards that are contingent upon the Company achieving certain pre-determined financial performance targets, compensation expense is calculated based on the number of shares expected to vest after assessing the probability that the performance criteria will be met. Determining the probability of achieving a performance target requires estimates and judgment.

The Company recognized $1.4 million and $1.0 million of stock-based compensation expense during the three months ended March 31, 2021 and 2020, respectively. Total unrecognized compensation expense related to unvested stock awards and unvested RSUs at March 31, 2021 amounts to $5.0 million and is expected to be recognized over a weighted average period of 1 year.

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Accumulated Other Comprehensive Loss (Income)

3 Months Ended

Mar. 31, 2021

Equity [Abstract]

Accumulated Other Comprehensive Loss (Income)

7. Accumulated Other Comprehensive Loss (Income)

The accumulated balances for each classification of comprehensive loss (income) are presented below:

	Foreign Currency Translation Adjustments			Change in Fair Value of Hedging Instrument			Unrecognized Pension Benefit Costs			Accumulated Other Comprehensive (Income)
	(in millions)
Balance at January 1, 2021		(71.1	)		2.8			37.2			(31.1	)
Change during the period		1.1			(1.1	)		(4.6	)		(4.6	)
Balance at March 31, 2021	$	(70.0	)	$	1.7		$	32.6		$	(35.7	)

	Foreign Currency Translation Adjustments			Change in Fair Value of Hedging Instrument		Unrecognized Pension Benefit Costs			Accumulated Other Comprehensive (Income)
	(in millions)
Balance at January 1, 2020		(76.5	)		1.4		30.0			(45.1	)
Change during the period		(3.1	)		1.1		(4.4	)		(6.4	)
Balance at March 31, 2020	$	(79.6	)	$	2.5	$	25.6		$	(51.5	)

Included within accumulated other comprehensive income is an amount of $0.4 million relating to the change in fair value of discontinued hedging instruments. This amount will be amortized as a charge to income over the life of the original instrument, to August 2021 in accordance with US GAAP. The remaining $1.3 million relates to currently active hedging instruments.

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Net Loss Per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Net Loss Per Share

8. Net Loss per Share

Basic loss per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential shares of common stock outstanding during the period, including stock options, restricted stock, RSUs and warrants, using the treasury stock method, and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.

The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

	Three Months Ended March 31,
	2021		2020
RSUs		3,564,814		2,954,493
Unvested Restricted Stock		624,116		624,116
Stock Warrants		9,539,565		9,539,565
		13,728,495		13,118,174

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Other Finance Income (Expense)

3 Months Ended

Mar. 31, 2021

Other Income and Expenses [Abstract]

Other Finance Income (Expense)

9. Other Finance Income (Expense)

Other finance income (expense) consisted of the following:

	Three Months Ended March 31,
	2021			2020
	(in millions)
Pension interest cost	$	(0.4	)	$	(0.6	)
Expected return on pension plan assets		0.7			0.8
Foreign currency translation on senior bank debt		6.1			(3.9	)
	$	6.4		$	(3.7	)

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Income Taxes

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

10. Income Taxes

The effective income tax rate for the three months ended March 31, 2021 and 2020 was 4.0% and 2.0%, respectively, resulting in a $0.7 million income tax benefit and a $0.2 million income tax expense, respectively. The Company’s effective income tax rate has fluctuated primarily as a result of the income mix between jurisdictions.

The income tax expense for the three months ended March 31, 2021 and 2020 differs from the amount that would be expected after applying the statutory U.S. federal income tax rate primarily due to pre-tax losses for which no tax benefit can be recorded, and foreign earnings being taxed at rates different than the US statutory rate.

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Related Parties

3 Months Ended

Mar. 31, 2021

Related Party Transactions [Abstract]

Related Parties

11. Related Parties

Macquarie Corporate Holdings Pty Limited (UK Branch) (“Macquarie UK”), is an affiliate of MIHI LLC, the beneficial owner of approximately 13% of our common stock. Macquarie UK is one of the lending parties with respect to our senior secured term loans and revolving credit facility under our senior facilities agreement dated September 27, 2019, as amended and restated on June 25, 2020 (the “SFA”). The portion of the total loans of $310.6 million at March 31, 2021, and $313.3 million at December 31, 2020, under these facilities held by Macquarie UK at March 31, 2021 and December 31, 2020 was $30.4 million and $30.7 million, respectively. Interest expense payable to Macquarie UK for the three months ended March 31, 2021 and 2020 amounted to $0.6 million and $0.5 million, respectively. In addition, $0.5 million and $0.6 million of accrued interest payable was due to Macquarie UK at March 31, 2021 and December 31, 2020, respectively. MIHI LLC, also holds warrants to purchase 1,000,000 shares of our common stock and is a party to a stockholders agreement with the Company and other stockholders, dated December 23, 2016, pursuant to which, subject to certain conditions, MIHI LLC, jointly with Hydra Industries Sponsor LLC, are permitted to designate two directors to be nominated for election as directors of the Company at any annual or special meeting of stockholders at which directors are to be elected, until such time as MIHI LLC and Hydra Industries Sponsor LLC in the aggregate hold less than 5% of the outstanding shares of the Company.

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Leases

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

12. Leases

The Company is party to leases with third parties with respect to various gaming machines. Gaming machine leases typically include a lease (of the machine) and a non-lease (provision of software services) component.

The components of lease income were as follows:

	Three Months Ended March 31,
	2021		2020
	(in millions)
Interest receivable from sales type leases	$	—	$	—
Operating lease income		—		1.0
Variable income from sales type leases		—		0.2
Total	$	—	$	1.2

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

Employment Agreements

We are party to employment agreements with our executive officers and other employees of the Company and our subsidiaries which contain, among other terms, provisions relating to severance and notice requirements.

Our employment agreement with our Executive Chairman dated October 9, 2020 provides that, subject to the terms and conditions thereunder, our Executive Chairman would receive special grants covering 750,000 RSUs (a mix of time-based RSUs, performance-based RSUs and stock-price based RSUs) during the year ending December 31, 2021, subject to the condition that our stockholders approve an increase in our equity incentive plan share authorization limit at the annual meeting of our stockholders to be held during 2021. Such RSUs were granted on May 11, 2021 upon the approval by our stockholders of a new equity incentive plan (see Note 17).

Legal Matters

From time to time, the Company may become involved in lawsuits and legal matters arising in the ordinary course of business. While the Company believes that, currently, it has no such matters that are material, there can be no assurance that existing or new matters arising in the ordinary course of business will not have a material adverse effect on the Company’s business, financial condition or results of operations.

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Pension Plan

3 Months Ended

Mar. 31, 2021

Retirement Benefits [Abstract]

Pension Plan

14. Pension Plan

We operate a defined contribution plan in the US, and both defined benefit and defined contribution pension schemes in the UK. The defined contribution scheme assets are held separately from those of the Company in independently administered funds.

Defined Benefit Pension Scheme

The defined benefit scheme has been closed to new entrants since April 1, 1999 and closed to future accruals for services rendered to the Company for the entire financial statement periods presented. On March 15, 2019, it was agreed that no further deficit reduction contributions would be made to the scheme, except in the event that the scheme funding level does not progress as expected, in which case contingent contributions would be made subject to an agreed maximum amount.

In January 2021, the funding level of the scheme was tested against the expected position at December 31, 2020 and it was determined that further contingent contributions of $1.2 million and expense contributions of $0.4 million will be payable during the year ending December 31, 2021.

The funding level of the scheme will next be tested against the expected position at December 31, 2021 to determine whether further contingent contributions are payable during the year ending December 31, 2022.

The total amount of employer contributions paid during the three months ended March 31, 2021 amounted to $0.1 million relating to the three months ended March 31, 2021, and $0.4 million of contributions relating to the year ending December 31, 2020 agreed with the trustees of the scheme to be deferred into the year ending December 31, 2021.

The following table presents the components of our net periodic pension benefit cost:

	Three Months Ended March 31,
	2021			2020
	(in millions)
Components of net periodic pension benefit cost:
Interest cost	$	0.4		$	0.6
Expected return on plan assets		(0.7	)		(0.8	)
Net periodic (benefit) cost	$	(0.3	)	$	(0.2	)

The following table sets forth the estimate of the combined funded status of the pension plans and their reconciliation to the related amounts recognized in our consolidated financial statements at the respective measurement dates:

	March 31, 2021			December 31, 2020
	(in millions)
Change in benefit obligation:
Benefit obligation at beginning of period	$	127.8		$	110.4
Interest cost		0.4			2.2
Actuarial (gain)/loss		(9.9	)		14.5
Benefits paid		(0.6	)		(4.1	)
Foreign currency translation adjustments		1.5			4.8
Benefit obligation at end of period	$	119.2		$	127.8
Change in plan assets:
Fair value of plan assets at beginning of period	$	118.7		$	107.3
Actual (loss)/gain on plan assets		(4.8	)		9.8
Employer contributions		0.1			1.6
Benefits paid		(0.6	)		(4.1	)
Foreign currency translation adjustments		1.3			4.1
Fair value of assets at end of period	$	114.7		$	118.7
Amount recognized in the consolidated balance sheets:
Unfunded status (non-current)	$	(4.5	)	$	(9.1	)
Net amount recognized	$	(4.5	)	$	(9.1	)

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Segment Reporting and Geographic Information

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment Reporting and Geographic Information

15. Segment Reporting and Geographic Information

The Company operates its business along four operating segments, which are segregated on the basis of revenue stream: Gaming, Virtual Sports, Interactive and Leisure. The Company believes this method of segment reporting reflects both the way its business segments are managed and the way the performance of each segment is evaluated.

In prior years, and up to and including the interim period nine months ended September 30, 2020, the Company operated its business along three operating segments: Server Based Gaming, Virtual Sports (which included Interactive) and Acquired Businesses. During the period subsequent to September 30, 2020, the Company completed the process of changing its internal structure, which has been ongoing since the NTG Acquisition, and as a result changed the composition of its operating segments.

The following tables present revenue, cost of sales, excluding depreciation and amortization, selling, general and administrative expenses, depreciation and amortization, stock-based compensation expense and acquisition related transaction expenses, operating profit/(loss), total assets and total capital expenditures for the periods ended March 31, 2021 and March 31, 2020, respectively, by business segment. Certain unallocated corporate function costs have not been allocated to the Company’s reportable operating segments because these costs are not allocable and to do so would not be practical. Corporate function costs consist primarily of selling, general and administrative expenses, depreciation and amortization, capital expenditures, right of use assets, cash, prepaid expenses and property and equipment and software development costs relating to corporate/shared functions. All acquisition and integration related transaction expenses are allocated as corporate function costs. Amounts previously disclosed for the three months ended March 31, 2020 have been recharacterized in line with the current operating segments and categories.

In addition, as part of the recharacterization exercise, certain items of Revenue, Cost of Sales and Selling, General and Administrative Expenses have been recharacterized to ensure consistency with similar items across the Group. The revenue recharacterizations are to ensure spares and similar items are reflected with other items of hardware (Product Sales). The resulting impact on previously reported information for the three months ended March 31, 2020 is as follows: Service Revenue, previously reported $43.2 million, now $42.8 million; Product Sales Revenue, previously reported $9.1 million, now $9.5 million; Cost of Service, previously reported $6.6 million, now $8.5 million; Cost of Product Sales, previously reported $7.0 million, now $6.2 million; Selling, General and Administrative Expenses (excluding Stock-based compensation), previously reported $29.1 million, now $28.0 million. The recharacterization has no impact on the previously reported Net Operating Loss, Net Loss or Net Comprehensive Loss for the three months ended March 31, 2020.

Segment Information

Three Months Ended March 31, 2021

	Gaming			Virtual Sports			Interactive			Leisure			Corporate Functions			Total
	(in millions)
Revenue:
Service	$	5.6		$	6.3		$	5.2		$	—		$	—		$	17.1
Product sales		5.2			—			—			0.5			—			5.7
Total revenue		10.8			6.3			5.2			0.5			—			22.8
Cost of sales, excluding depreciation and amortization:
Cost of service		(0.6	)		(0.3	)		(0.8	)		(0.4	)		—			(2.1	)
Cost of product sales		(2.9	)		—			—			(0.3	)		—			(3.2	)
Selling, general and administrative expenses		(4.1	)		(1.1	)		(1.0	)		(3.2	)		(4.4	)		(13.8	)
Stock-based compensation expense		(0.2	)		(0.1	)		(0.1	)		(0.1	)		(0.9	)		(1.4	)
Acquisition and integration related transaction expenses		—			—			—			—			(1.4	)		(1.4	)
Depreciation and amortization		(6.6	)		(1.1	)		(0.7	)		(4.2	)		(0.5	)		(13.1	)
Segment operating income (loss)		(3.6	)		3.7			2.6			(7.7	)		(7.2	)		(12.2	)
Net operating loss																$	(12.2	)
Total assets at March 31, 2021	$	78.7		$	60.9		$	13.3		$	84.6		$	63.5		$	301.0
Total goodwill at March 31, 2021	$	1.5		$	48.5		$	0.4		$	34.3		$	—		$	84.7
Total capital expenditures for the three months ended March 31, 2021	$	1.2		$	0.8		$	0.9		$	3.1		$	0.2		$	6.2

Three Months Ended March 31, 2020

	Gaming			Virtual Sports			Interactive			Leisure			Corporate Functions			Total
	(in millions)
Revenue:
Service	$	16.6		$	7.8		$	2.1		$	16.3		$	—		$	42.8
Product sales		8.3			—			—			1.2			—			9.5
Total revenue		24.9			7.8			2.1			17.5			—			52.3
Cost of sales, excluding depreciation and amortization:
Cost of service		(4.3	)		(0.7	)		(0.2	)		(3.3	)		—			(8.5	)
Cost of product sales		(5.4	)		—			—			(0.8	)		—			(6.2	)
Selling, general and administrative expenses		(8.9	)		(1.2	)		(1.2	)		(11.0	)		(5.7	)		(28.0	)
Stock-based compensation expense		(0.1	)		(0.1	)		—			—			(0.8	)		(1.0	)
Acquisition and integration related transaction expenses		—			—			—			—			(3.2	)		(3.2	)
Depreciation and amortization		(7.4	)		(0.8	)		(0.6	)		(3.4	)		(0.4	)		(12.6	)
Segment operating income (loss)		(1.2	)		5.0			0.1			(1.0	)		(10.1	)		(7.2	)
Net operating loss																$	(7.2	)
Total assets at December 31, 2020	$	93.9		$	64.4		$	8.5		$	87.0		$	70.3		$	324.1
Total goodwill at December 31, 2020	$	1.4		$	48.0		$	0.4		$	33.9		$	—		$	83.7
Total capital expenditures for the three months ended March 31, 2020	$	2.7		$	1.0		$	0.6		$	5.2		$	2.3		$	11.8

Geographic Information

Geographic information for revenue is set forth below:

	Three Months Ended March 31,
	2021		2020
	(in millions)
Total revenue
UK	$	10.9	$	38.4
Greece		2.3		4.8
Canada		1.8		0.1
Italy		1.3		2.2
Rest of world		6.5		6.8
Total	$	22.8	$	52.3

Geographic information of our non-current assets excluding goodwill is set forth below:

	March 31, 2021		December 31, 2020
	(in millions)
UK	$	97.0	$	101.8
Greece		15.2		18.2
Italy		1.9		2.1
Rest of world		9.6		9.3
Total	$	123.7	$	131.4

Software development costs are included as attributable to the market in which they are utilized.

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Customer Concentration

3 Months Ended

Mar. 31, 2021

Risks and Uncertainties [Abstract]

Customer Concentration

16. Customer Concentration

During the three months ended March 31, 2021, there were two customers that represented at least 10% of the Company’s revenues, accounting for 16% and 14% of the Company’s revenues. These customers were served by the Gaming, Virtual Sports and Interactive segments, and the Virtual Sports and Interactive segments, respectively. During the three months ended March 31, 2020, there were no customers that represented at least 10% of the Company’s revenues.

At March 31, 2021 and December 31, 2020, there were no customers that represented at least 10% of accounts receivable.

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Subsequent Events

3 Months Ended

Mar. 31, 2021

Subsequent Events [Abstract]

Subsequent Events

17. Subsequent Events

The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the financial statements were issued. Other than as described below, the Company did not identify subsequent events that would have required adjustment or disclosure in the consolidated financial statements.

On April 12, 2021, the Company’s Board of Directors adopted the 2021 Omnibus Incentive Plan (the “2021 Plan”), subject to the approval of our stockholders, which was obtained at the Company’s annual meeting of stockholders held on May 11, 2021. The 2021 Plan authorizes a total of 2,900,000 shares to be issued pursuant to awards and will also replace the 2018 Plan such that shares available for grant under the 2018 Plan would instead be available for grant under the 2021 Plan. Upon approval of the 2021 Plan, the Company’s Executive Chairman received the sign-on equity awards discussed above pursuant to the terms of his employment agreement (see Note 13).

On May 13, 2021, the Company issued a press release announcing that Inspired Entertainment (Financing) PLC, a wholly owned finance subsidiary of the Company, priced a private offering of £235.0 million ($324.2 million) aggregate principal amount of its 7.875% senior secured notes due 2026 (the “2026 Senior Secured Notes”). The 2026 Senior Secured Notes will be guaranteed by the Company and certain of its English and U.S. subsidiaries. The offering is expected to close on or about May 20, 2021, subject to customary closing conditions.

The Company intends to use the proceeds from the offering of the 2026 Senior Secured Notes (i) to repay its existing £145.8 million ($201.1 million) senior secured term loan facility and €93.1 million ($109.4 million) senior secured term loan facility and accrued interest thereon, (ii) to pay fees, commissions and expenses incurred in connection with the refinancing, and (iii) for general corporate purposes, including to close-out derivative contracts entered into in connection with the existing term loan facilities. As part of the refinancing, the Company will also be putting into place a new 4.5 year £20 million ($27.6 million) Super Priority Senior Secured Revolving Credit Facility.

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Nature of Operations, Management's Plans and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Company Description and Nature of Operations

Company Description and Nature of Operations

We are a global gaming technology company, supplying content, platform and other products and services to online and land-based regulated lottery, betting and gaming operators worldwide through a broad range of distribution channels, predominantly on a business-to-business basis. We provide end-to-end digital gaming solutions (i) on our own proprietary and secure network, which accommodates a wide range of devices, including land-based gaming machine terminals, mobile devices and online computer applications and (ii) through third party networks. Our content and other products can be found through the consumer-facing portals of our interactive customers and, through our land-based customers, in licensed betting offices, adult gaming centers, pubs, bingo halls, airports, motorway service areas and leisure parks.

Management Liquidity Plans

Management Liquidity Plans

As of March 31, 2021, the Company’s cash on hand was $41.2 million, and the Company had working capital of $1.4 million. The Company recorded net losses of $16.4 million and $10.2 million for the three months ended March 31, 2021 and 2020, respectively. Net losses include excess depreciation and amortization over capital expenditure of $8.3 million and $0.6 million for the three months ended March 31, 2021, and 2020, respectively, non-cash stock-based compensation of $1.4 million and $1.0 million for the three months ended March 31, 2021 and 2020, respectively, and non-cash changes in fair value of warrant liability of $3.0 million loss and $7.6 million income for the three months ended March 31, 2021 and 2020, respectively. Historically, the Company has generally had positive cash flows from operating activities and has relied on a combination of cash flows provided by operations and the incurrence of debt and/or the refinancing of existing debt to fund its obligations. Cash flows used in operations amounted to $2.0 million and $11.1 million provided by operations for the three months ended March 31, 2021 and 2020, respectively with the change year on year due to land based operations being subject to full lockdown restrictions for the three months ended March 31, 2021. Working capital of $1.4 million includes a non-cash settled item of $9.3 million of deferred income, and an item not expected to be cash settled of $16.0 million comprising a warrant liability. Management currently believes that, absent any unanticipated COVID-19 impact (see below), the Company’s cash balances on hand, cash flows expected to be generated from operations, ability to control and defer capital projects and amounts available from the Company’s external borrowings will be sufficient to fund the Company’s net cash requirements through May 2022.

Our business continues to be adversely affected by the continuing nature of the COVID-19 pandemic. Due to the fluidity with which the situation continues to develop, we are not able at this time to estimate the extent of the impact of the COVID-19 pandemic on our financial results and operations in future periods. The long-term impacts of the pandemic on the global economy, trade relations, consumer behavior, our industry and our business operations remain unknown, however the vaccination programme in the UK began on December 8, 2020, and as of the date of this report, whilst the majority of retail venues in Italy and Greece are closed, the UK is poised to re-open retail venues from May 17, 2021, and the vaccination programme in the UK remains on schedule.

As a result of the significant reductions in revenue and other changes to our business, at least in the short term (which also affects other companies in our industry), we continue to protect our existing available liquidity by pro-actively managing capital expenditures and working capital as well as identifying both immediate and longer term opportunities for cost savings.

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management’s opinion, however, that the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the years ended December 31, 2020 and 2019. The financial information as of December 31, 2020 is derived from the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2021 (“the Original 10-K”), and as amended and filed on Form 10-K/A with the SEC on May 10, 2021 (“the 10-K/A”). The interim results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future interim periods.

Restatement of Previously Reported Information

Restatement of Previously Reported Information

On May 7, 2021, after consultation with Marcum LLP, the Company’s independent registered public accounting firm, the Company’s management and the audit committee of the Company’s Board of Directors concluded that it was appropriate to restate the Company’s previously issued audited financial statements as of December 31, 2020, and December 31, 2019, and for the years ended December 31, 2020, and December 31, 2019, which were included in the Original 10-K.

The restatement related to the SEC’s public statement released on April 12, 2021, informing market participants that warrants issued by special purpose acquisition companies may require classification as a liability of the entity measured at fair value, with changes in fair value each period reported in earnings.

The effect of the restatement on previously reported information for the three months ended March 31, 2020 is as follows:

	As Previously Reported			Adjustments			As Restated
	(in millions, except per share data)
Consolidated Statements of Stockholders’ Deficit as of January 1, 2020
Additional paid in capital	$	346.6		$	(26.0	)	$	320.6
Accumulated deficit		(441.2	)		16.2			(425.0	)
Consolidated Statement of Operations and Comprehensive Loss for the three months ended March 31, 2020
Change in fair value of warrant liability	$	—		$	7.6		$	7.6
Net loss		(17.4	)		7.6			(9.8	)
Comprehensive loss		(11.0	)		7.6			(3.4	)
Net loss per common share – basic and diluted	$	(0.78	)	$	0.34		$	(0.44	)
Consolidated Statements of Stockholders’ Deficit as of March 31, 2020
Additional paid in capital	$	347.6		$	(26.0	)	$	321.6
Accumulated deficit		(458.6	)		23.8			(434.8	)

Recharacterization of Previously Reported Information

Recharacterization of Previously Reported Information

In prior years, and up to and including the interim period nine months ended September 30, 2020, the Company operated its business along three operating segments: Server Based Gaming, Virtual Sports (which included Interactive) and Acquired Businesses. During the period subsequent to September 30, 2020, the Company completed the process of changing its internal structure, which has been ongoing since the NTG Acquisition, and as a result changed the composition of its operating segments. The Company now operates its business along four operating segments, which are segregated on the basis of revenue stream: Gaming, Virtual Sports, Interactive and Leisure. The Company believes this method of segment reporting reflects both the way its business segments are now managed and the way the performance of each segment is now evaluated.

As part of the recharacterization exercise, certain items of Revenue, Cost of Sales and Selling, General and Administrative Expenses have been recharacterized to ensure consistency with similar items across the Group. The revenue recharacterizations are to ensure spares and similar items are reflected with other items of hardware (Product Sales). The resulting impact on previously reported information for the three months ended March 31, 2020 is as follows: Service Revenue, previously reported $43.2 million, now $42.8 million; Product Sales Revenue, previously reported $9.1 million, now $9.5 million; Cost of Service, previously reported $6.6 million, now $8.5 million; Cost of Product Sales, previously reported $7.0 million, now $6.2 million; Selling, General and Administrative Expenses (excluding Stock-based compensation), previously reported $29.1 million, now $28.0 million. The recharacterization has no impact on the previously reported Net Operating Loss, Net Loss or Net Comprehensive Loss for the three months ended March 31, 2020.

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Nature of Operations, Management's Plans and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Restatement

The effect of the restatement on previously reported information for the three months ended March 31, 2020 is as follows:

	As Previously Reported			Adjustments			As Restated
	(in millions, except per share data)
Consolidated Statements of Stockholders’ Deficit as of January 1, 2020
Additional paid in capital	$	346.6		$	(26.0	)	$	320.6
Accumulated deficit		(441.2	)		16.2			(425.0	)
Consolidated Statement of Operations and Comprehensive Loss for the three months ended March 31, 2020
Change in fair value of warrant liability	$	—		$	7.6		$	7.6
Net loss		(17.4	)		7.6			(9.8	)
Comprehensive loss		(11.0	)		7.6			(3.4	)
Net loss per common share – basic and diluted	$	(0.78	)	$	0.34		$	(0.44	)
Consolidated Statements of Stockholders’ Deficit as of March 31, 2020
Additional paid in capital	$	347.6		$	(26.0	)	$	321.6
Accumulated deficit		(458.6	)		23.8			(434.8	)

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Inventory (Tables)

3 Months Ended

Mar. 31, 2021

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consists of the following:

	March 31, 2021		December 31, 2020
	(in millions)
Component parts	$	11.5	$	12.1
Work in progress		1.8		1.7
Finished goods		3.8		3.8
Total inventories	$	17.1	$	17.6

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Contract Liabilities and Other Disclosures (Tables)

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Schedule of Contract Related Balances

The following table summarizes contract related balances:

	Accounts Receivable		Unbilled Accounts Receivable		Deferred Income			Customer Prepayments and Deposits
	(in millions)
At March 31, 2021	$	23.8	$	5.0	$	(18.5	)	$	(1.8	)
At December 31, 2020	$	30.4	$	8.2	$	(22.9	)	$	(1.6	)
At December 31, 2019	$	24.5	$	15.3	$	(27.8	)	$	(1.9	)

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Derivatives and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Outstanding Derivatives Designated as Cash Flow Hedges

As of March 31, 2021, and December 31, 2020, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:

Interest Rate Derivative	Number of Instruments	Notional
Interest rate swaps	2	£95 million ($131.1 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and €60 million ($70.5 million) at a fixed rate of 0.102% based on the 6 month EURIBOR rate

Schedule of Fair Value of Derivative Financial Instruments

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheet as of March 31, 2021.

	Balance Sheet Classification		Asset Derivatives Fair Value		Balance Sheet Classification	Liability Derivatives Fair Value
			(in millions)			(in millions)
Derivatives designated as hedging instruments:
Interest Rate Products		Fair Value of Hedging Instruments	$	—	Derivative Liability	$	(1.7	)
Total derivatives designated as hedging instruments			$	—		$	(1.7	)

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification in the consolidated balance sheet as of December 31, 2020.

	Balance Sheet Classification		Asset Derivatives Fair Value		Balance Sheet Classification	Liability Derivatives Fair Value
			(in millions)			(in millions)
Derivatives designated as hedging instruments:
Interest Rate Products		Fair Value of Hedging Instruments	$	—	Other Current Liabilities and Long Term Derivative Liability	$	(2.6	)
Total derivatives designated as hedging instruments			$	—		$	(2.6	)

Schedule of Accumulated Other Comprehensive Income

The table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the three months ended March 31, 2021.

	Amount of Gain/(Loss) Recognized in Other Comprehensive Income on Derivative			Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income
	(in millions)			(in millions)
Interest Rate Products	$	0.6	Interest Expense	$	(0.5	)
Total	$	0.6		$	(0.5	)

The table below presents the effect of fair value and cash flow hedge accounting on accumulated other comprehensive income for the three months ended March 31, 2020.

	Amount of Gain Recognized in Other Comprehensive Income on Derivative				Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income
	(in millions)				(in millions)
Interest Rate Products	$	(1.5	)	Interest Expense	$	(0.4	)
Total	$	(1.5	)		$	(0.4	)

Schedule of Consolidated Income Statements

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2021.

	Interest Expense
	(in millions)
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$	8.6
Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$	(0.5	)

The table below presents the effect of the Company’s derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2020.

	Interest Expense
	(in millions)
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$	6.1
Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$	(0.4	)

Schedule of Offsetting of Derivative Assets and Liabilities

Offsetting of Derivative Assets

March 31, 2021

Gross Amounts Not Offset in the Statement of Financial Position

Gross Amounts of Recognized Assets

Gross Amounts Offset in the Statement of Financial Position

Net Amounts of Assets presented in the Statement of Financial Position

Financial Instruments

Cash Collateral Received

Net Amount

(in millions)

Fair value of hedging instrument

$

—

$

—

$

—

$

—

$

—

$

—

Offsetting of Derivative Liabilities
March 31, 2021
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
	(in millions)
Fair value of hedging instrument	$	1.7	$	—	$	1.7	$	—	$	—	$	—

Offsetting of Derivative Assets

December 31, 2020

Gross Amounts Not Offset in the Statement of Financial Position

Gross Amounts of Recognized Assets

Gross Amounts Offset in the Statement of Financial Position

Net Amounts of Assets presented in the Statement of Financial Position

Financial Instruments

Cash Collateral Received

Net Amount

(in millions)

Fair value of hedging instrument

$

—

$

—

$

—

$

—

$

—

$

—

Offsetting of Derivative Liabilities
December 31, 2020
							Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities presented in the Statement of Financial Position		Financial Instruments		Cash Collateral Received		Net Amount
	(in millions)
Fair value of hedging instrument	$	2.6	$	—	$	2.6	$	—	$	—	$	—

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Schedule of Derivative Financial Instrument Assets and Liabilities Measured at Fair Value on Recurring Basis

For each period, derivative financial instrument assets and liabilities measured at fair value on a recurring basis are included in the financial statements as per the table below.

		March 31,		December 31,
	Level	2021		2020
		(in millions)
Public Warrants (included in warrant liability)	1	$	4.3	$	3.2
Long term receivable (included in other assets)	2	$	1.3	$	1.4
Private Placement Warrants (included in warrant liability)	2	$	11.7	$	9.8
Derivative liability (see Note 4)	2	$	1.7	$	2.6

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Schedule of Restricted Stock Unit Activity

A summary of the Company’s RSU activity during the three months ended March 31, 2021 is as follows:

	Number of Shares
Unvested Outstanding at January 1, 2021		2,149,118
Granted		59,466
Forfeited		(13,954	)
Vested		(11,418	)
Unvested Outstanding at March 31, 2021		2,183,212

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Accumulated Other Comprehensive Loss (Income) (Tables)

3 Months Ended

Mar. 31, 2021

Equity [Abstract]

Schedule of Accumulated Other Comprehensive (Loss) Income

The accumulated balances for each classification of comprehensive loss (income) are presented below:

	Foreign Currency Translation Adjustments			Change in Fair Value of Hedging Instrument			Unrecognized Pension Benefit Costs			Accumulated Other Comprehensive (Income)
	(in millions)
Balance at January 1, 2021		(71.1	)		2.8			37.2			(31.1	)
Change during the period		1.1			(1.1	)		(4.6	)		(4.6	)
Balance at March 31, 2021	$	(70.0	)	$	1.7		$	32.6		$	(35.7	)

	Foreign Currency Translation Adjustments			Change in Fair Value of Hedging Instrument		Unrecognized Pension Benefit Costs			Accumulated Other Comprehensive (Income)
	(in millions)
Balance at January 1, 2020		(76.5	)		1.4		30.0			(45.1	)
Change during the period		(3.1	)		1.1		(4.4	)		(6.4	)
Balance at March 31, 2020	$	(79.6	)	$	2.5	$	25.6		$	(51.5	)

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Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The computation of diluted EPS excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

	Three Months Ended March 31,
	2021		2020
RSUs		3,564,814		2,954,493
Unvested Restricted Stock		624,116		624,116
Stock Warrants		9,539,565		9,539,565

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Other Finance Income (Expense) (Tables)

3 Months Ended

Mar. 31, 2021

Other Nonoperating Income (Expense) [Abstract]

Schedule of Other Finance Income (Expense)

Other finance income (expense) consisted of the following:

	Three Months Ended March 31,
	2021			2020
	(in millions)
Pension interest cost	$	(0.4	)	$	(0.6	)
Expected return on pension plan assets		0.7			0.8
Foreign currency translation on senior bank debt		6.1			(3.9	)
	$	6.4		$	(3.7	)

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Leases (Tables)

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Schedule of Lease Income

The components of lease income were as follows:

	Three Months Ended March 31,
	2021		2020
	(in millions)
Interest receivable from sales type leases	$	—	$	—
Operating lease income		—		1.0
Variable income from sales type leases		—		0.2
Total	$	—	$	1.2

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Pension Plan (Tables)

3 Months Ended

Mar. 31, 2021

Retirement Benefits [Abstract]

Schedule of Defined Benefit Plans

The following table presents the components of our net periodic pension benefit cost:

	Three Months Ended March 31,
	2021			2020
	(in millions)
Components of net periodic pension benefit cost:
Interest cost	$	0.4		$	0.6
Expected return on plan assets		(0.7	)		(0.8	)
Net periodic (benefit) cost	$	(0.3	)	$	(0.2	)

Schedule of Pension Plans and Their Reconciliation

The following table sets forth the estimate of the combined funded status of the pension plans and their reconciliation to the related amounts recognized in our consolidated financial statements at the respective measurement dates:

	March 31, 2021			December 31, 2020
	(in millions)
Change in benefit obligation:
Benefit obligation at beginning of period	$	127.8		$	110.4
Interest cost		0.4			2.2
Actuarial (gain)/loss		(9.9	)		14.5
Benefits paid		(0.6	)		(4.1	)
Foreign currency translation adjustments		1.5			4.8
Benefit obligation at end of period	$	119.2		$	127.8
Change in plan assets:
Fair value of plan assets at beginning of period	$	118.7		$	107.3
Actual (loss)/gain on plan assets		(4.8	)		9.8
Employer contributions		0.1			1.6
Benefits paid		(0.6	)		(4.1	)
Foreign currency translation adjustments		1.3			4.1
Fair value of assets at end of period	$	114.7		$	118.7
Amount recognized in the consolidated balance sheets:
Unfunded status (non-current)	$	(4.5	)	$	(9.1	)
Net amount recognized	$	(4.5	)	$	(9.1	)

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Segment Reporting and Geographic Information (Tables)

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Schedule of Segment Reporting Information By Segment

Segment Information

Three Months Ended March 31, 2021

	Gaming			Virtual Sports			Interactive			Leisure			Corporate Functions			Total
	(in millions)
Revenue:
Service	$	5.6		$	6.3		$	5.2		$	—		$	—		$	17.1
Product sales		5.2			—			—			0.5			—			5.7
Total revenue		10.8			6.3			5.2			0.5			—			22.8
Cost of sales, excluding depreciation and amortization:
Cost of service		(0.6	)		(0.3	)		(0.8	)		(0.4	)		—			(2.1	)
Cost of product sales		(2.9	)		—			—			(0.3	)		—			(3.2	)
Selling, general and administrative expenses		(4.1	)		(1.1	)		(1.0	)		(3.2	)		(4.4	)		(13.8	)
Stock-based compensation expense		(0.2	)		(0.1	)		(0.1	)		(0.1	)		(0.9	)		(1.4	)
Acquisition and integration related transaction expenses		—			—			—			—			(1.4	)		(1.4	)
Depreciation and amortization		(6.6	)		(1.1	)		(0.7	)		(4.2	)		(0.5	)		(13.1	)
Segment operating income (loss)		(3.6	)		3.7			2.6			(7.7	)		(7.2	)		(12.2	)
Net operating loss																$	(12.2	)
Total assets at March 31, 2021	$	78.7		$	60.9		$	13.3		$	84.6		$	63.5		$	301.0
Total goodwill at March 31, 2021	$	1.5		$	48.5		$	0.4		$	34.3		$	—		$	84.7
Total capital expenditures for the three months ended March 31, 2021	$	1.2		$	0.8		$	0.9		$	3.1		$	0.2		$	6.2

Three Months Ended March 31, 2020

	Gaming			Virtual Sports			Interactive			Leisure			Corporate Functions			Total
	(in millions)
Revenue:
Service	$	16.6		$	7.8		$	2.1		$	16.3		$	—		$	42.8
Product sales		8.3			—			—			1.2			—			9.5
Total revenue		24.9			7.8			2.1			17.5			—			52.3
Cost of sales, excluding depreciation and amortization:
Cost of service		(4.3	)		(0.7	)		(0.2	)		(3.3	)		—			(8.5	)
Cost of product sales		(5.4	)		—			—			(0.8	)		—			(6.2	)
Selling, general and administrative expenses		(8.9	)		(1.2	)		(1.2	)		(11.0	)		(5.7	)		(28.0	)
Stock-based compensation expense		(0.1	)		(0.1	)		—			—			(0.8	)		(1.0	)
Acquisition and integration related transaction expenses		—			—			—			—			(3.2	)		(3.2	)
Depreciation and amortization		(7.4	)		(0.8	)		(0.6	)		(3.4	)		(0.4	)		(12.6	)
Segment operating income (loss)		(1.2	)		5.0			0.1			(1.0	)		(10.1	)		(7.2	)
Net operating loss																$	(7.2	)
Total assets at December 31, 2020	$	93.9		$	64.4		$	8.5		$	87.0		$	70.3		$	324.1
Total goodwill at December 31, 2020	$	1.4		$	48.0		$	0.4		$	33.9		$	—		$	83.7
Total capital expenditures for the three months ended March 31, 2020	$	2.7		$	1.0		$	0.6		$	5.2		$	2.3		$	11.8

Schedule of Geographic Information

Geographic information for revenue is set forth below:

	Three Months Ended March 31,
	2021		2020
	(in millions)
Total revenue
UK	$	10.9	$	38.4
Greece		2.3		4.8
Canada		1.8		0.1
Italy		1.3		2.2
Rest of world		6.5		6.8
Total	$	22.8	$	52.3

Geographic information of our non-current assets excluding goodwill is set forth below:

	March 31, 2021		December 31, 2020
	(in millions)
UK	$	97.0	$	101.8
Greece		15.2		18.2
Italy		1.9		2.1
Rest of world		9.6		9.3
Total	$	123.7	$	131.4

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Nature of Operations, Management's Plans and Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Cash on hand	$ 41,200		$ 47,100
Working capital	1,400
Net losses	(16,700)	$ (9,800)
Excess depreciation and amortization over capital expenditure	8,300	600
Share-based compensation	1,400	1,000
Change in fair value of warrant liability	3,000	7,600
Net cash provided by operating	(2,000)	11,100
Deferred income	9,300
Warrant liability	16,000		$ 13,000
Revenue	22,800	52,300
Cost of service	2,100	8,500
Cost of product sales	3,200	6,200
Selling, general and administrative expenses excluding stock-based compensation	15,200	29,000
As Previously Reported [Member]
Net losses		(17,400)
Change in fair value of warrant liability
Cost of service		6,600
Cost of product sales		7,000
Selling, general and administrative expenses excluding stock-based compensation		29,100
Service [Member]
Revenue	17,100	42,800
Service [Member] | As Previously Reported [Member]
Revenue		43,200
Product Sales [Member]
Revenue	$ 5,700	9,500
Product Sales [Member] | As Previously Reported [Member]
Revenue		$ 9,100

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Nature of Operations, Management's Plans and Summary of Significant Accounting Policies - Schedule of Restatement (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Additional paid in capital	$ 326,000	$ 321,600	$ 324,600
Accumulated deficit	(474,100)	(434,800)	$ (457,400)
Change in fair value of warrant liability	3,000	7,600
Net loss	(16,700)	(9,800)
Comprehensive loss	$ (12,100)	$ (3,400)
Net loss per common share - basic and diluted	$ (.74)	$ (.44)
As Previously Reported [Member]
Additional paid in capital	$ 346,600	$ 347,600
Accumulated deficit	(441,200)	(458,600)
Change in fair value of warrant liability
Net loss		(17,400)
Comprehensive loss		$ (11,000)
Net loss per common share - basic and diluted		$ (.78)
Adjustments [Member]
Additional paid in capital	(26,000)	$ (26,000)
Accumulated deficit	$ 16,200	23,800
Change in fair value of warrant liability		7,600
Net loss		7,600
Comprehensive loss		$ 7,600
Net loss per common share - basic and diluted		$ .34

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Inventory (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Reserves for excess and slow-moving inventory	$ 1,800	$ 1,500

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Inventory - Schedule of Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Inventory Disclosure [Abstract]
Component parts	$ 11,500	$ 12,100
Work in progress	1,800	1,700
Finished goods	3,800	3,800
Total inventories	$ 17,100	$ 17,600

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Contract Liabilities and Other Disclosures (Details Narrative) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Revenue from Contract with Customer [Abstract]
Revenue recognized in deferred income	$ 3,900	$ 10,300

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Contract Liabilities and Other Disclosures - Schedule of Contract Related Balances (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Accounts Receivable	$ 23,800	$ 30,400	$ 24,500
Unbilled Accounts Receivable	5,000	8,200	15,300
Deferred Income	(18,500)	(22,900)	(27,800)
Customer Prepayments and Deposits	$ (1,800)	$ (1,600)	$ (1,900)

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Derivatives and Hedging Activities (Details Narrative) € in Thousands, £ in Thousands, $ in Thousands		3 Months Ended
	Jan. 15, 2020 USD ($)	Mar. 31, 2021 USD ($)	Jan. 15, 2020 EUR (€)	Jan. 15, 2020 GBP (£)
Derivative reclassified as increase to interest expense		$ 1,500
ISDA Agreements [Member]
Fair value of derivatives net liability position		1,700
Termination amount		$ 2,500
LIBOR [Member] | Interest Rate Swap [Member]
Principal of face amount	$ 131,100
LIBOR [Member] | EUR [Member] | Interest Rate Swap [Member]
Description of terms	The Company entered into two interest rate swaps with UBS AG designed to protect the Company against adverse fluctuations in interest rates by reducing its exposure to variability in cash flows on a portion of the current floating rate debt facilities. The swaps fix the variable interest rate of the current debt facilities and provide protection over potential interest rate increases by providing a fixed rate of interest payment in return. These interest rate swaps are for £95 million ($131.1 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and for €60 million ($70.5 million) at a fixed rate of 0.102% based on the 6 month EURIBOR rate and are effective until maturity on October 1, 2023.
Maturity date	Oct. 01, 2023
LIBOR [Member] | GBP [Member] | Interest Rate Swap [Member]
Principal of face amount | £				£ 95,000
Debt interest rate	0.9255%		0.9255%	0.9255%
EUROLIBOR [Member] | Interest Rate Swap [Member]
Principal of face amount	$ 70,500
EUROLIBOR [Member] | EUR [Member] | Interest Rate Swap [Member]
Principal of face amount | €			€ 60,000
Debt interest rate	0.102%		0.102%	0.102%

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Derivatives and Hedging Activities - Schedule of Outstanding Derivatives Designated as Cash Flow Hedges (Details) - Designated as Hedging Instrument [Member] - Cash Flow Hedging [Member] - Cross Currency Interest Rate Swap [Member] - Instrument	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Number of Instruments	2	2
Notional	£95 million ($131.1 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and €60 million ($70.5 million) at a fixed rate of 0.102% based on the 6 month EURIBOR rate	£95 million ($131.1 million) at a fixed rate of 0.9255% based on the 6-month LIBOR rate and €60 million ($70.5 million) at a fixed rate of 0.102% based on the 6 month EURIBOR rate

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Derivatives and Hedging Activities - Schedule of Fair Value of Derivative Financial Instruments (Details) - Designated as Hedging Instrument [Member] - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Hedging Instrument [Member] | Asset Derivatives Fair Value [Member]
Balance Sheet Classification	Fair Value of Hedging Instruments	Fair Value of Hedging Instruments
Interest Rate Products
Total derivatives designated as hedging instruments
Derivative Liability [Member] | Liability Derivatives Fair Value [Member]
Balance Sheet Classification	Other Current Liabilities and Long Term Derivative Liability	Other Current Liabilities and Long Term Derivative Liability
Interest Rate Products	$ (1,700)	$ (2,600)
Total derivatives designated as hedging instruments	$ (1,700)	$ (2,600)

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Derivatives and Hedging Activities - Schedule of Accumulated Other Comprehensive Income (Details) - Fair Value and Cash Flow Hedging [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Amount of Gain/(Loss Recognized in Other Comprehensive Income on Derivative	$ 600	$ (1,500)
Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income	(500)	(400)
Interest Expense [Member]
Location of Gain Reclassified from Accumulated Other Comprehensive Income into Income	(500)	(400)
Interest Rate and Foreign Exchange Products [Member]
Amount of Gain/(Loss Recognized in Other Comprehensive Income on Derivative	$ 600	$ (1,500)

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Derivatives and Hedging Activities - Schedule of Consolidated Income Statements (Details) - Interest Expense [Member] - Fair Value and Cash Flow Hedging [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Total amounts of income and expense line items presented in the statement of operations and comprehensive loss in which the effects of fair value or cash flow hedges are recorded	$ 8,600	$ 6,100
Gain/(loss) on cash flow hedging relationships in Subtopic 815-20	$ (500)	$ (400)

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Derivatives and Hedging Activities - Schedule of Offsetting of Derivative Assets and Liabilities (Details) - Hedging Instrument [Member] - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Gross Amounts of Recognized Assets
Gross Amounts Offset in the Statement of Financial Position
Net Amounts of Assets presented in the Statement of Financial Position
Financial Instruments
Cash Collateral Received
Net Amount
Gross Amounts of Recognized Liabilities	1,700	2,600
Gross Amounts Offset in the Statement of Financial Position
Net Amounts of Liabilities presented in the Statement of Financial Position	1,700	2,600
Financial Instruments
Cash Collateral Received
Net Amount

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Fair Value Measurements - Schedule of Derivative Financial Instrument Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Fair Value, Inputs, Level 1 [Member]
Public Warrants (included in warrant liability)	$ 4,300	$ 3,200
Fair Value, Inputs, Level 2 [Member]
Long term receivable (included in other assets)	1,300	1,400
Private Placement Warrants (included in warrant liability)	11,700	9,800
Derivative liability (see Notes 14 and 17)	$ 1,700	$ 2,600

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Stock-Based Compensation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Stock-based compensation expense	$ 1,400	$ 1,000
Unrecognized compensation expense	$ 5,000
Weighted average period for recognition	1 year
Employee Stock Purchase Plan [Member]
Outstanding awards plan, description	(i) 1,777,611 shares subject to outstanding awards under the 2018 Plan, including 75,000 shares subject to performance-based target awards and 259,300 shares subject to awards that were previously subject to performance criteria that were determined to have been met for the applicable performance year which awards continue to remain subject to a time-based vesting schedule; and (ii) 2,411,319 shares subject to outstanding awards under the Prior Plans, including 1,092,633 shares subject to market-price vesting conditions that have a satisfaction deadline of December 23, 2021.
Number of shares available	467,751
Issuance of an aggregate shares of common stock	500,000
2018 Plan [Member]
Restricted stock awards outstanding	1,777,611
Number of shares available	221,799
2018 Plan [Member] | Time Based Vesting Schedule [Member]
Restricted stock awards outstanding	259,300
2018 Plan [Member] | Performance-Based Stock [Member]
Restricted stock awards outstanding	75,000
2018 Plan [Member] | Restricted Stock [Member]
Number of shares issued	163,752
Prior Plans [Member]
Restricted stock awards outstanding			2,411,319
Prior Plans [Member] | Market-Price Vesting Conditions [Member]
Restricted stock awards outstanding			1,092,633

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Stock-Based Compensation - Schedule of Restricted Stock Unit Activity (Details) - Restricted Stock [Member] - Incentive Plan [Member]	3 Months Ended
	Mar. 31, 2021 shares
Number of shares, Unvested Outstanding, Beginning balance	2,149,118
Number of shares, Granted	59,466
Number of shares, Forfeited	(13,954)
Number of shares, Vested	(11,418)
Number of shares, Unvested Outstanding, Ending balance	2,183,212

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Accumulated Other Comprehensive Loss (Income) (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020	Dec. 31, 2019
Accumulated other comprehensive income	$ 35,700	$ 31,100	$ 51,500	$ 45,100
Hedging Instrument [Member]
Accumulated other comprehensive income	400
Active Hedging [Member]
Accumulated other comprehensive income	$ 1,300

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Accumulated Other Comprehensive Loss (Income) - Schedule of Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Equity [Abstract]
Foreign Currency Translation Adjustments, Beginning balance	$ (71,100)	$ (76,500)
Foreign Currency Translation Adjustments, Change during the period	1,100	(3,100)
Foreign Currency Translation Adjustments, Ending balance	(70,000)	(79,600)
Change in Fair Value of Hedging Instrument, Beginning balance	2,800	1,400
Change in Fair Value of Hedging Instrument, Change during the period	(1,100)	1,100
Change in Fair Value of Hedging Instrument, Ending balance	1,700	2,500
Unrecognized Pension Benefit Costs, Beginning balance	37,200	30,000
Unrecognized Pension Benefit Costs, Change during the period	(4,600)	(4,400)
Unrecognized Pension Benefit Costs, Ending balance	32,600	25,600
Accumulated Other Comprehensive (Income), Beginning balance	(31,100)	(45,100)
Accumulated Other Comprehensive (Income), Change during the period	(4,600)	(6,400)
Accumulated Other Comprehensive (Income), Ending balance	$ (35,700)	$ (51,500)

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Net Loss Per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Number of antidilutive securities excluded from computation of earnings per share	13,728,495	13,118,174
RSUs [Member]
Number of antidilutive securities excluded from computation of earnings per share	3,564,814	2,954,493
Unvested Restricted Stock [Member]
Number of antidilutive securities excluded from computation of earnings per share	624,116	624,116
Stock Warrants [Member]
Number of antidilutive securities excluded from computation of earnings per share	9,539,565	9,539,565

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Other Finance Income (Expense) - Schedule of Other Finance Income (Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Other Income and Expenses [Abstract]
Pension interest cost	$ (400)	$ (600)
Expected return on pension plan assets	700	800
Foreign currency translation on senior bank debt	6,100	(3,900)
Other finance income (Costs)	$ 6,400	$ (3,700)

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Income Taxes (Details Narrative) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Income Tax Disclosure [Abstract]
Effective income tax rate	2.00%	4.00%
Income tax expense (benefit)	$ 200	$ (700)	$ 200

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Related Parties (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Secured term loans	$ 310,600		$ 313,300
Interest expense	$ 8,600	$ 6,100
Macquarie Corporate Holdings Pty Limited [Member]
Percentage of equity ownership	13.00%
Secured term loans	$ 30,400		30,700
Interest expense	600	$ 500
Accrued interest payable	$ 500		$ 600
MIHI LLC [Member]
Warrants to purchase common stock	1,000,000
MIHI LLC and Hydra Industries Sponsor LLC [Member] | Maximum [Member]
Percentage of equity ownership	5.00%

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Leases - Schedule of Lease Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Leases [Abstract]
Interest receivable from sales type leases
Operating lease income		1,000
Variable income from sales type leases		200
Total		$ 1,200

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Commitments and Contingencies (Details Narrative)	Oct. 09, 2020 shares
Executive Chairman [Member]
Restricted stock units, shares	750,000

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Pension Plan (Details Narrative) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		12 Months Ended
	Jan. 31, 2021	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2021	Dec. 31, 2020
Contingent contributions	$ 1,200
Employer contributions		$ 100	$ 400		$ 1,600
Forecast [Member]
Expense contributions				$ 400

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Pension Plan - Schedule of Defined Benefit Plans (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Retirement Benefits [Abstract]
Interest cost	$ 400	$ 600
Expected return on plan assets	(700)	(800)
Net periodic (benefit) cost	$ (300)	$ (200)

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Pension Plan - Schedule of Pension Plans and Their Reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Retirement Benefits [Abstract]
Benefit obligation at beginning of period	$ 127,800	$ 110,400	$ 110,400
Interest cost	400		2,200
Actuarial loss	(9,900)		14,500
Benefits paid	(600)		(4,100)
Foreign currency translation adjustments	1,500		4,800
Benefit obligation at end of period	119,200		127,800
Fair value of plan assets at beginning of period	118,700	107,300	107,300
Actual gain on plan assets	(4,800)		9,800
Employer contributions	100	$ 400	1,600
Benefits paid	(600)		(4,100)
Foreign currency translation adjustments	1,300		4,100
Fair value of assets at end of period	114,700		118,700
Unfunded status (non-current)	(4,500)		(9,100)
Net amount recognized	$ (4,500)		$ (9,100)

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Segment Reporting and Geographic Information (Details Narrative) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($) Integer	Mar. 31, 2020 USD ($)
Segment Reporting and Geographic Information (Details) [Line Items]
Number of operating segment | Integer	4
Revenue	$ 22,800	$ 52,300
Cost of service	2,100	8,500
Cost of product sales	3,200	6,200
Selling, general and administrative expenses	15,200	29,000
As Previously Reported [Member]
Segment Reporting and Geographic Information (Details) [Line Items]
Cost of service		6,600
Cost of product sales		7,000
Selling, general and administrative expenses		29,100
Service [Member]
Segment Reporting and Geographic Information (Details) [Line Items]
Revenue	17,100	42,800
Service [Member] | As Previously Reported [Member]
Segment Reporting and Geographic Information (Details) [Line Items]
Revenue		43,200
Product Sales [Member]
Segment Reporting and Geographic Information (Details) [Line Items]
Revenue	$ 5,700	9,500
Product Sales [Member] | As Previously Reported [Member]
Segment Reporting and Geographic Information (Details) [Line Items]
Revenue		$ 9,100

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Segment Reporting and Geographic Information - Schedule of Segment Reporting Information By Segment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Segment Reporting Information [Line Items]
Total revenue	$ 22,800	$ 52,300
Cost of service	(2,100)	(8,500)
Cost of product sales	(3,200)	(6,200)
Selling, general and administrative expenses	(15,200)	(29,000)
Stock-based compensation expense	(1,400)	(1,000)
Acquisition and integration related transaction expenses	(1,400)	(3,200)
Depreciation and amortization	(13,100)	(12,600)
Segment operating income (loss)	(12,200)	(7,200)
Total assets	301,000	324,100	$ 324,100
Total goodwill	84,700	83,700	$ 83,700
Total capital expenditures	6,200	11,800
Service [Member]
Segment Reporting Information [Line Items]
Total revenue	17,100	42,800
Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue	5,700	9,500
Gaming [Member]
Segment Reporting Information [Line Items]
Total revenue	10,800	24,900
Cost of service	(600)	(4,300)
Cost of product sales	(2,900)	(5,400)
Selling, general and administrative expenses	(4,100)	(8,900)
Stock-based compensation expense	(200)	(100)
Acquisition and integration related transaction expenses
Depreciation and amortization	(6,600)	(7,400)
Segment operating income (loss)	(3,600)	(1,200)
Total assets	78,700	93,900
Total goodwill	1,500	1,400
Total capital expenditures	1,200	2,700
Gaming [Member] | Service [Member]
Segment Reporting Information [Line Items]
Total revenue	5,600	16,600
Gaming [Member] | Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue	5,200	8,300
Virtual Sports [Member]
Segment Reporting Information [Line Items]
Total revenue	6,300	7,800
Cost of service	(300)	(700)
Cost of product sales
Selling, general and administrative expenses	(1,100)	(1,200)
Stock-based compensation expense	(100)	(100)
Acquisition and integration related transaction expenses
Depreciation and amortization	(1,100)	(800)
Segment operating income (loss)	3,700	5,000
Total assets	60,900	64,400
Total goodwill	48,500	48,000
Total capital expenditures	800	1,000
Virtual Sports [Member] | Service [Member]
Segment Reporting Information [Line Items]
Total revenue	6,300	7,800
Virtual Sports [Member] | Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue
Interactive [Member]
Segment Reporting Information [Line Items]
Total revenue	5,200	2,100
Cost of service	(800)	(200)
Cost of product sales
Selling, general and administrative expenses	(1,000)	(1,200)
Stock-based compensation expense	(100)
Acquisition and integration related transaction expenses
Depreciation and amortization	(700)	(600)
Segment operating income (loss)	2,600	100
Total assets	13,300	8,500
Total goodwill	400	400
Total capital expenditures	900	600
Interactive [Member] | Service [Member]
Segment Reporting Information [Line Items]
Total revenue	5,200	2,100
Interactive [Member] | Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue
Leisure [Member]
Segment Reporting Information [Line Items]
Total revenue	500	17,500
Cost of service	(400)	(3,300)
Cost of product sales	(300)	(800)
Selling, general and administrative expenses	(3,200)	(11,000)
Stock-based compensation expense	(100)
Acquisition and integration related transaction expenses
Depreciation and amortization	(4,200)	(3,400)
Segment operating income (loss)	(7,700)	(1,000)
Total assets	84,600	87,000
Total goodwill	34,300	33,900
Total capital expenditures	3,100	5,200
Leisure [Member] | Service [Member]
Segment Reporting Information [Line Items]
Total revenue		16,300
Leisure [Member] | Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue	500	1,200
Corporate Functions [Member]
Segment Reporting Information [Line Items]
Total revenue
Cost of service
Cost of product sales
Selling, general and administrative expenses	(4,400)	(5,700)
Stock-based compensation expense	(900)	(800)
Acquisition and integration related transaction expenses	(1,400)	(3,200)
Depreciation and amortization	(500)	(400)
Segment operating income (loss)	(7,200)	(10,100)
Total assets	63,500	70,300
Total goodwill
Total capital expenditures	200	2,300
Corporate Functions [Member] | Service [Member]
Segment Reporting Information [Line Items]
Total revenue
Corporate Functions [Member] | Product Sales [Member]
Segment Reporting Information [Line Items]
Total revenue

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Segment Reporting and Geographic Information - Schedule of Geographic Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	$ 22,800	$ 52,300
Total non-current assets excluding goodwill	123,700		$ 131,400
UK [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	10,900	38,400
Total non-current assets excluding goodwill	97,000		101,800
Greece [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	2,300	4,800
Total non-current assets excluding goodwill	15,200		18,200
Canada [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	1,800	100
Italy [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	1,300	2,200
Total non-current assets excluding goodwill	1,900		2,100
Rest of World [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenue	6,500	$ 6,800
Total non-current assets excluding goodwill	$ 9,600		$ 9,300

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Customer Concentration (Details Narrative) - Sales Revenue [Member] - Customer Concentration Risk [Member]	3 Months Ended
	Mar. 31, 2021
Customer One [Member]
Customer Concentration (Details) [Line Items]
Concentration risk, percentage	16.00%
Customer Two [Member]
Customer Concentration (Details) [Line Items]
Concentration risk, percentage	14.00%
No Customer [Member]
Customer Concentration (Details) [Line Items]
Concentration risk, percentage	10.00%

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Subsequent Events (Details Narrative) - Subsequent Event [Member] € in Thousands, £ in Thousands, $ in Thousands	May 13, 2021 USD ($)	May 13, 2021 EUR (€)	May 13, 2021 GBP (£)	May 13, 2021 EUR (€)	Apr. 12, 2021 shares
2026 Senior Secured Notes [Member]
Proceeds from private offering	$ 324,200
Debt instrument, interest rate	7.875%			7.875%
Repayments of debt	$ 201,100
Debt instrument principal and accrued interest	109,400
2026 Senior Secured Notes [Member] | GBP [Member]
Proceeds from private offering | £			£ 235,000
Repayments of debt | £			£ 145,800
2026 Senior Secured Notes [Member] | EUR [Member]
Debt instrument principal and accrued interest | €				€ 93,100
Super Priority Senior Secured Revolving Credit Facility [Member]
Proceeds from private offering	$ 27,600
Super Priority Senior Secured Revolving Credit Facility [Member] | EUR [Member]
Proceeds from private offering | €		€ 20,000
2021 Omnibus Incentive Plan [Member]
Number of shares authorized | shares					2,900,000