ELYS: 1H21 Growth Underscores Strong Market Demand

By M. Marin

NASDAQ:ELYS

READ THE FULL ELYS RESEARCH REPORT

1H21 Turnover up significantly

Elys Game Technology (NASDAQ:ELYS) reported 2Q21 results last week. Year-to-date, the company has recorded record turnover – or betting handle – of $463.3 million. This represents year-over-year growth of 120.5%, despite the negative impact of the pandemic on land-based operations. Turnover has grown from about $122 million in 2016 to $574 million in 2020, which represents a CAGR of 47% as the company’s expansion and market share gains continue. The above-noted turnover of$463 million in 1H21 exceeds the $454 million registered in the full year of 2019 and represents more than 80% of the $574 million registered in full year 2020.

Online growth remains strong

Consistent with earlier periods during the pandemic, the drivers of turnover growth shifted from land-based to web-based, primarily reflecting the impact of COVID-19, although ELYS believes that some land-based betting shops might be able to re-open as the 2021-2022 European soccer season gets underway. In turn, this would provide additional growth in the company’s home market of Italy that could enhance 2H21 growth.

USB acquisition expected to facilitate expansion efforts

ELYS completed the acquisition of Bookmakers Company US LLC (USB) earlier in 3Q21. Management believes the acquisition will enhance its global growth strategy. The USB team has extensive sportsbook experience. ELYS expects USB will expand its customer base and U.S. footprint. Moreover, the feedback that ELYS can get through the USB unit will enable it to better adapt and innovate in order to introduce products and services to meet player needs.

DC roll-out represents model that can easily be replicated in other venues / markets

The company’s first U.S. rollout is planned for Washington, D.C. and the company believes it is well-positioned to capture market share in the market. The Washington, D.C. metropolitan area authorized retail and online sports betting in 2020 and retail players appear to be enthusiastic. The company is ready to enter the Washington, D.C. market as soon as it receives regulatory approval. Moreover, ELYS believes that the model it has developed for this initial market can be replicated in many other locations in Washington DC and potentially other markets.

Industry forecasts support expectation of significant market opportunity in the U.S. and North America. For example, Morningstar forecasts that U.S. sports betting could reach $6.2 billion in industry revenue by 2024. Other industry forecasts are even higher, supporting ELYS’s expectation that the U.S. sports betting and online gaming market represents a sizable opportunity for its platform. Canada passed the Safe and Regulated Sports Betting Act (Bill C-218) on June 22, 2021, enabling provincial governments to authorize and manage single-event sports betting. This could potentially present additional opportunities for ELYS, we believe.

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