NorthStar Gaming Reports Third Quarter 2024 Results

Significant growth in wagers, revenue and gross margin

NorthStar Gaming Holdings Inc. (TSXV: BET) (OTCQB: NSBBF) ("NorthStar" or the "Company") today announced its financial results for the three- and nine-month periods ended September 30, 2024. All dollar figures are quoted in Canadian dollars.

"We delivered exceptional year-over-year growth across all key metrics in the third quarter, including a 69% increase in total wagers and a 63% boost in gross margin," said Michael Moskowitz, Chair and CEO of NorthStar. "Our consistent revenue growth and improved economies of scale have enabled gross margin to fully cover overhead costs–a significant milestone in our journey toward profitability. Additionally, marketing expenditures as a percentage of revenue have declined substantially, dropping from two-thirds last year to roughly half year-to-date, further demonstrating our continually improving operational efficiency and strategic focus."

Financial Highlights for the Third Quarter Ended September 30, 2024 ("Q3 2024"):

• Total Wagers[1] at Northstarbets.ca were $234 million, a 69% increase compared to $138 million in Q3 2023.
• Gross Gaming Revenue[1] at NorthStarbets.ca was $8.4 million, a 53% increase from $5.5 million in Q3 2023.
• Revenue[2] was $6.8 million in Q3 2024, a 45% increase from $4.7 million in Q3 2023.
• Gross Margin was $2.7 million, representing a 63% increase from $1.6 million in Q3 2023, while the Gross Margin percentage increased by 400 basis points to 39%, from 35% in Q3 2023.
• Profit/(loss) before marketing and other expenses[1] was $0.1 million in Q3 2024 compared to $(0.5) million in Q3 2023, as gross margin is now sufficient to cover the Company's overhead expenses.

Financial Highlights for the Nine-Month Period Ended September 30, 2024 ("YTD 2024"):

• Total Wagers[1] at Northstarbets.ca reached $677 million, a 54% increase compared to $438 million in the nine months ended September 30, 2023 ("YTD 2023").
• Gross Gaming Revenue[1] at NorthStarbets.ca was $24.1 million, a 56% increase from $15.4 million in YTD 2023.
• Revenue[2] totaled $20.2 million, a 55% increase from $13.0 million in YTD 2023.
• Gross Margin was $8.0 million, marking a 72% increase from $4.7 million in YTD 2023, with the Gross Margin percentage increasing to 40%, up from 36% in the comparable period of 2023.
• Profit/(loss) before marketing and other expenses¹ was $0.6 million in YTD 2024 compared to $(3.0) million in YTD 2023, as gross margin is now sufficient to cover the Company's overhead expenses.

Recent Operating Highlights:

• The Company continued to outpace the industry growth rates reported by iGaming Ontario in Q3 2024 in both Total Wagers (54% for NorthStar vs. 32% for the industry) and Gross Gaming Revenue (67% for NorthStar vs. 37% for the industry).^[3]
• NorthStar recently completed its inaugural Blackjack Championship tournament, an innovative online competition with a total prize pool of $100,000.
• In October, the Company announced the launch across all platforms of "Sports Insights 2.0," a robust suite of enhancements that includes a redesigned home page, comprehensive team and player statistics, injury and player news feeds, added coverage of popular sports and strengthened casino content.
• The Company also announced a series of enhancements to its online betting platform in September, highlighted by streamlined navigation in both the Casino and Sportsbook sections, a doubling of Casino game selection since the start of 2024, personalized prop bets and intelligent parlay suggestions.

Outlook

"The marketing investments and product launches we executed in Q3 have set us up for a strong finish to the year, as the fourth quarter is typically a seasonally robust period," said Mr. Moskowitz. "With the continued momentum in our business and operating leverage driving improved financial results, we are highly optimistic about our ability to deliver significant shareholder value in 2025."

Management is working diligently to secure additional funding and remains confident that the Company will be able to access the capital necessary to continue to support its growth strategy. The Company expects to provide an update in the coming weeks.

Q3 Corporate Update Webinar

On December 3, 2024, Michael Moskowitz will present an in-depth Corporate Update, including a discussion of the Company's Q3 Earnings, current operations and upcoming milestones. All investors and other interested parties are invited to register for the webinar at the link below.

Date: Tuesday, December 3rd, 2024
Time: 11am ET
Register: Webinar Registration

Management will be available to answer your questions following the presentation on the webinar platform. You may also submit your question(s) beforehand in the registration form linked above.

Extension of Strategic Marketing Agreement

The Company also announced that its wholly owned subsidiary, NorthStar Gaming (Ontario) Inc. ("NorthStar Ontario"), has agreed to extend its partnership with Playtech Software Limited ("Playtech Software") through the renewal of their previously announced strategic marketing agreement. Under the agreement, Playtech Software contributes services designed to accelerate NorthStar Ontario's player acquisition strategy in the province. The agreement was first implemented in June 2023 and renewed earlier this year, with Playtech Software contributing services valued at a total of $8 million through to October 31, 2024, representing a significant driver of NorthStar Ontario's growth over that period. The latest renewal, valued at up to $1 million, extends the agreement for two months through to December 31, 2024. Playtech Software will be reimbursed and compensated through a share of revenue from the income generated in connection with the marketing initiatives to which it contributes.

Additional Information

For additional information, please refer to Company's condensed consolidated interim financial statements for the three- and nine-month periods ended September 30, 2024, and the corresponding management's discussion and analysis ("MD&A"). These documents are available on SEDAR+ at www.sedarplus.ca, and on the Company's corporate website at www.northstargaming.ca.

About NorthStar

NorthStar proudly owns and operates NorthStar Bets, a Canadian-born casino and sportsbook platform that delivers a premium, distinctly local gaming experience. Designed with high-stakes players in mind, NorthStar Bets Casino offers a curated selection of the most popular games, ensuring an elevated user experience. Our sportsbook stands out with its exclusive Sports Insights feature, seamlessly integrating betting guidance, stats, and scores, all tailored to meet the expectations of a premium audience.

As a Canadian company, NorthStar is uniquely positioned to cater to customers who seek a high-quality product and an exceptional level of personalized service, setting a new standard in the industry. NorthStar is committed to operating at the highest level of responsible gaming standards.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

Non-IFRS Financial Measures

Throughout this document, management uses certain non-IFRS financial measures and supplementary financial measures to evaluate the performance of the Company. The terms "Gross Gaming Revenue" "Total Wagers" and "Profit/(Loss) before marketing and other expenses" are non-IFRS financial measures. These measures are not recognized measures under International Financial Reporting Standards ("IFRS") and do not have a standardized meaning prescribed by IFRS and are, therefore, not necessarily comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective and to discuss NorthStar's financial outlook. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures, including industry metrics, in the evaluation of companies in our industry. Management also uses non-IFRS measures and industry metrics in order to facilitate operating performance comparisons from period to period, the preparation of annual operating budgets and forecasts and to determine components of executive compensation.

Total Wagers

Total Wagers is calculated as the total amount of money bet by customers in respect of bets that have settled in the applicable period. Total Wagers does not include free bets or other promotional incentives, nor money bet by customers in respect of bets that are open at period end. Total Wagers is used to provide investors with supplemental measures of our operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures.

Gross Gaming Revenue

Gross Gaming Revenue is calculated as dollar amounts bet by customers less the dollar amounts paid out to the customers in respect of such bets which have settled in the applicable period.

Reconciliation of Non-IFRS Measures to IFRS Measures

In Q3 2024, the Company reported $8.6 million of Gross Gaming Revenue ($24.9 million in YTD 2024) and has provided a reconciliation to the most comparable IFRS financial measure (Revenue) as follows:

Operating Results

Marketing expenses are a key driver of the business but are completely discretionary. Management considers "Profit/(Loss) before marketing and other expenses" to be a good indication of the extent to which the business' Gross Margin is in excess of its overhead costs, and therefore offsetting some portion of marketing expenses, reflecting improving economies of scale.

(1) These measures are not defined by IFRS, do not have standard meanings and may not be comparable with other industries or companies.

Cautionary Note Regarding Forward-Looking Information and Statements

This communication contains "forward-looking information" within the meaning of applicable securities laws in Canada ("forward-looking statements"), including without limitation, statements with respect to the following: expected performance of the Company's business, expansion into new markets and future growth opportunities and expected benefits of transactions. The foregoing are provided for the purpose of presenting information about management's current expectations and plans relating to the future and allowing investors and others to get a better understanding of the Company's anticipated financial position, results of operations, and operating environment. Often, but not always, forward- looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. This forward-looking information is based on management's opinions, estimates and assumptions that, while considered by NorthStar to be appropriate and reasonable as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, levels of activity, performance, or achievements to be materially different from those expressed or implied by such forward- looking information. Such factors include, among others, the following: risks related to the Company's business and financial position; risks associated with general economic conditions; adverse industry risks; future legislative and regulatory developments; the ability of the Company to implement its business strategies; and those factors discussed in greater detail under the "Risk Factors" section of the Company's most recent annual information form, which is available under NorthStar's profile on SEDAR+ at www.sedarplus.ca. Many of these risks are beyond the Company's control.

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking statements. Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements, there may be other risk factors not presently known to the Company or that the Company presently believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking statements. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents NorthStar's expectations as of the date specified herein, and are subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements.

^[1] Represents a Non-IFRS financial measure. See "Non-IFRS Financial Measures" below for more information.

^[2] Revenue includes managed services fees, and Gross Gaming Revenue net of bonuses, promotional costs and free bets.

^[3] iGaming Ontario's FY 2024-25 Q2 Market Performance Report, October 24, 2024.

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