SMALL CAP IDEA: Gaming Realms has bet well on the USA
SMALL CAP IDEA: Gaming Realms targets US gambling jackpot
Gambling isn’t legal across the whole of America yet but having lifted a 1992 ban in 2018 many US States are beginning to approve online, in-person and sports betting.
Companies are beginning to capitalize on the unexplored market.
Both Flutter Entertainment, the parent company of Paddy Power, and Entain, the owner of Ladbrokes, have a strong presence in the US. They own popular sportsbooks, namely FanDuel and BetMGM. Recent trading updates suggest that both companies anticipate significant growth in the US market.
However, it’s not only the large players in the FTSE 100 who are capitalizing on this opportunity.
Shares in Gaming Realms have experienced a growth of nearly 40 percent since the beginning of the year.
Gaming Realms, a developer and licensor of gambling content, is also enjoying plenty of growth Stateside, recently reporting a 37 per cent year-on-year uptick in North American first-half revenues.
The group is famous for its Slingo games, which combine slots and bingo. The company’s shares have increased by nearly 40% so far this year, and the management is optimistic that their streak of 13 consecutive half-years of growth will continue.
Accounting for 45 per cent of the London-listed firm’s total content licensing, the offering in the US is constantly growing through new deals with partners such as Pokerstars, which recently penned an agreement with the group in New Jersey to license one of its games.
Gaming Realms’ products are now available for gamblers in Pennsylvania, Michigan, Connecticut, and Nevada, in addition to New Jersey where they already have 57 different offerings live through 20 different licensees.
Gaming Realms’ Slingo games, acquired for $18 million in 2015, possess a remarkable feature of adaptability to cater to customer preferences.
Gaming Realms has successfully developed spin-off versions like Slingo Masked Singer, Slingo Riches, and Slingo Cleopatra. Additionally, they have created customized versions for American companies and audiences.
- Slingo Shark Week in collaboration with Warner Bros Discovery
- Slingo Rainbow Riches in partnership with US developers Light and Wonder
- Detroit Lions Slingo with BetMGM
- And how could anyone forget Lucky Larry’s Lobstermania Slingo, teaming with King Show Games
An analyst at broker Peel Hunt stated that the potential of making its entire content library available to all partners is evident.
No, Gaming Realms hasn’t inked a deal with Disney to spin out an Aladdin Slingo, but it is exploring new countries for its games spanning numerous continents.
Boss Mark Segal spoke with Proactive and said: ‘At the moment, we see a lot of growth in Slingo. It’s a very popular game with players around the world and we are able to build innovative games.’
Segal asserts that a significant portion of this achievement can be attributed to “expansion into untapped markets,” highlighting the impressive results in Canada and the US, as well as other lesser-known regions.
We currently have applications for Greece and South Africa, and we are actively seeking additional regulated markets.
The CEO of Gaming Realms stated that they have achieved success in recent years by expanding into new markets such as Italy, Spain, and the Netherlands.
In the previous month, the group successfully launched their services in Portugal by reaching an agreement with operator Betclic.
Buyouts are extremely commonplace in the gambling industry, highlighted no better than by the sheer number of bookies owned by Entain and Flutter, which includes Betfair, Ladbrokes, Coral, Sky Bet – and William Hill owned by 888 Holdings.
Investec stated that Gaming Realms is a desirable candidate for a potential takeover in an industry that continues to see a lot of mergers and acquisitions.
The company possesses a distinct Slingo product, along with numerous variations, which grants it a significant edge in competition. This advantage allows the company to potentially expand into new regions and acquire new customers with minimal extra expenses.
Investec highlights the presence of a capable management team, consisting of experienced professionals such as Segal, who previously served as the finance director at bwin.party, and chairman Michael Buckley, formerly the chair of Cashcade, a leading online bingo provider in the UK.
The risks involve stricter regulations in well-established markets like the UK. However, analysts from the South African bank believe that the current enterprise multiple of 7.3 times and earnings multiple of 17 undervalue the business to a significant extent.
Investec believes that its share price has the potential to increase from its current value of 35p to reach 48p, indicating a gain of more than 33 percent.
To access additional news on small-cap stocks, please visit: www.proactiveinvestors.co.uk
