REVENUE

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

REVENUE

NOTE 11 — REVENUE

The following table reflects revenue recognized for the three and six months ended June 30, 2024 and 2023 in line with the timing of transfer of services:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenue from services delivered at a point in time	$	22,570	$	23,863	$	40,875	$	47,763
Revenue from services delivered over time		12,990		9,895		25,336		21,124
Total	$	35,560	$	33,758	$	66,211	$	68,887

Contract and Contract-Related Liabilities

The Company has four types of liabilities related to contracts with customers: (i) cash consideration received in advance from customers related to development services not yet performed or hardware deliveries not yet completed, (ii) incentive program obligations, which represents the deferred allocation of revenue relating to incentives in the online gaming operations, (iii) user balances, which are funds deposited by customers before gaming play occurs and (iv) unpaid winnings and wagers contributed to jackpots. Contract-related liabilities are expected to be recognized as revenue within one year of being purchased, earned or deposited. Such liabilities are recorded in liabilities to users and other current liabilities in the condensed consolidated balance sheets.

In August 2023, WSI US, LLC (“WynnBet”) notified the Company of its intent to modify its multi-state revenue contract with the Company and, in November 2023, the Company completed its negotiations with WynnBet (the “WynnBet modification”). The results of renegotiations were primarily to amend performance obligations such that (i) obligations in certain states that had not launched at the modification date were formally terminated, (ii) obligations in certain states that launched prior to the modification date had the term reduced, and (iii) obligations in certain states such as Nevada, Massachusetts and New York would continue under more favorable commercial terms. The total consideration allocated to these modifications was $5.0 million, which was paid in November 2023.

The Company determined that the remaining performance obligations related to each state that either already launched or would launch under the modified agreement and allocated the $5.0 million consideration based on the estimated value attributable to each remaining performance obligation to be recognized over the remaining term.

WynnBet further agreed to terms for the state of Michigan governed by as separate revenue arrangement that provided WynnBet with an optional performance obligations for either migrations services or termination rights, at their choosing, of $5.0 million. In June 2024, WynnBet completed its sale of its Michigan business to Caesars Entertainment, Inc. (“Caesars”) and the Company entered into an agreement with Caesars to perform the migration services and added one performance obligation for the duration of the migration period, both of which were expected to be completed by September 2024. As of June 30, 2024, the Company performed migration services and recognized revenue in the amount of $1.4 million which represented the proportional effort completed relative to the total migration services.

Additional consideration was provided related to the Company’s right of first refusal to obtain WynnBet’s operation in the state of Michigan amounting to $1.8 million. WynnBet exercised this option in the quarter end March 31, 2024. As of June 30, 2024, the Company recognized revenue in the amount of $0.3 million and expects to recognize the remaining amount by September 2024.

GAN LIMITED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(in thousands, except share and per share amounts)

The following table reflects contract liabilities arising from cash consideration received in advance from customers for the periods presented:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Contract liabilities from advance customer payments, beginning of the period	$	9,000	$	2,655		7,873	$	2,117
Contract liabilities from advance customer payments, end of the period (1)		8,946		2,607		8,946		2,607
Revenue recognized from amounts included in contract liabilities from advance customer payments at the beginning of the period		1,103		263		1,287		457

⁽¹⁾ Contract liabilities from advance customer payments, end of period consisted of $5,279 and $1,760 recorded in other current liabilities in the condensed consolidated balance sheets at June 30, 2024 and 2023, respectively and $3,667 and $847 recorded in other liabilities in the condensed consolidated balance sheet at June 30, 2024 and 2023, respectively.