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Investors Ready to Gamble on Gaming Company

Gamblit Gaming raised a $25 million round of capital from undisclosed investors on May 9 to finance the manufacturing and development of additional touch-screen gambling machines.

The company transforms skill-based games, such as first-person shooter video games and classic card games, into formats that allow players to make wagers while playing.

The company signed a deal earlier this month with MGM Resorts International to field test multiplayer tablet-based poker and blackjack games on MGM’s casino floor in Las Vegas. Gamblit’s equipment is also being tested by Casear’s Entertainment Corp. and cruise line Carnival Corp.

Expansion to casinos can be costly, said Gamblit Chief Executive Eric Meyerhofer.

“We are typically on a lease model with casinos, so we have to finance the machinery,” he said.

However, he noted that casinos around the world are eager to add new types of gambling machines as revenue from slot machines stagnates or declines.

“They are finding they can’t really drive revenue by adding new, more exciting slots,” he said. “People that like slots are getting older; the people who are younger aren’t very interested in those.”

Real-World Problem

Virtual reality startup Upload Productions Inc. was hit with a laundry list of lurid allegations by a former female employee in a sexual harassment lawsuit filed in San Francisco Superior Court on May 8.

The Marina del Rey firm runs co-working spaces for VR startups in San Francisco and Los Angeles, publishes content about virtual reality through its website UploadVR, and runs workshops on production in the medium. It also announced a $4.5 million funding round last week. The company relocated from San Francisco in March.

Upload, founded in 2014, has raised nearly $6 million from investors including downtown’s Greycroft Partners.

Elizabeth Scott, Upload’s former director of social media, left the company in March. She has accused the firm and co-founders Will Mason and Taylor Freeman of operating a “boys club” that demeaned and excluded female employees, while glorifying open talk of sex, encouraging in-office sexual activity in a designated “kink room,” and turning a blind eye to an employee bringing prostitutes and strippers to a company event – among other allegations.

“These facts alleged in the complaint aren’t just a little bit illegal, but a lot illegal,” said employment attorney Jenny Schwartz, a partner at San Francisco’s Outten & Golden, who’s not involved in the case. “It’s like we are back to the ‘Mad Men’ days.”

Scott and her attorney did not respond to multiple requests for comment.

Other tech companies have come under scrutiny recently in regards to questionable corporate culture. Uber Technologies Inc. was hit with sexual harassments allegations in February by a former female engineer and Tesla Motors Inc. was sued for sexual harassment the same month by one of its female engineers.

“This is on the extreme end along a spectrum, but sadly this behavior is becoming more common,” Schwartz said.

Upload did not respond to a request for comment, but issued a statement to TechCrunch last week denying the allegations and stating that the company is committed to a positive work environment.

Cashing In

Online lottery ticket seller LottoGopher plans to take its stock north of the border for a public listing on May 23 on the Canadian Securities Exchange, a small-cap exchange in Toronto.

LottoGopher buys California Super Lotto Plus, Power Ball, and Mega Millions tickets from vendors and resells them online for the same price. Lotto vendors are not allowed by the state to sell tickets online, but third-party firms such as LottoGopher can, according to Chief Executive James Morel.

The company makes a profit by charging $12 a month or $99 a year for subscriptions. The firm was founded in 2010 and only operates in California. It has plans to expand to 22 states in the near future.

LottoGopher chose to list on the CSE to give its investors liquidity and because executives viewed it as a more legitimate than listing as an over-the-counter stock.

“(OTC) just wasn’t a crowd that we were comfortable with,” Morel said. “When you are talking about your finances, it really shouldn’t be a cowboy situation, the Wild West.”

The company will list with a market capitalization of $10.7 million, Morel said, noting that the startup closed a $3 million round of private financing last week from undisclosed investors, bringing its total funding to $4.2 million.

Staff Reporter Garrett Reim can be reached at greim@labusinessjournal.com or (323) 549-5225, ext. 232.

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