ELYS: Positive Indications from Recent Launch, New Agreement & Enhanced Financial Flexibility

By M. Marin



Enhancing financial flexibility to support growth initiatives

Elys Game Technology (NASDAQ:ELYS) is positioning itself to advance its growth strategy and enhance its financial flexibility to support expansion and other initiatives, we believe. Last week, the company filed a shelf registration and entered into an ATM agreement to raise up to $50 million from time to time, depending on market conditions. ELYS, which had $10.8M in cash, equivalents & restricted cash at the end of 3Q21, believes the U.S. and potentially Canadian markets represent a substantial opportunity and that it has early mover advantage.

Early results from initial U.S. platform launch encouraging

ELYS deployed its platform at the Grand Central Restaurant and Bar last month and recently announced a new deal with Ocean Casino in Atlantic City. This underscores the scalability and expected advantages of the ELYS platform, management believes, as ELYS expects the platform can support operations ranging from small venues (Grand Central) to large resort casino operators (Ocean). ELYS is encouraged by early results at Grand Central.

The Washington, D.C. launch enables Grand Central customers to place sports bets within the restaurant / bar, which is located in the Adams Morgan neighborhood of Washington, D.C. Importantly, ELYS’s recently acquired US Bookmaking (USB) subsidiary provided critical assistance with the deployment. The Grand Central is the company’s first U.S. rollout. The Washington, D.C. metropolitan area authorized retail and online sports betting in 2020 and retail players appear to be enthusiastic, according to trade publications. Management believes gross revenue per capita is already among the highest in the U.S.

Showcasing platform capability & flexibility & creating a template for future deployments

The company expects the Grand Central launch likely will form the basis for the template for deployment in other North American small businesses. ELYS expects the platform to operate efficiently in small venues such as Grand Central and also scale in larger operations such as tribal and other casinos.

Importantly, the Grand Central installation will enable the company to showcase its technology platform to potential new customers. The company is engaged in discussions with other restaurant owners and restaurant chains (see below), casino operators, and other small business owners. With the D.C. launch providing proof of concept, the Grand Central deployment could facilitate moving many of those forward, management believes.

Recent agreement portends further U.S. expansion

As noted, earlier this month, the company announced a partnership between the Ocean Casino Resort in Atlantic City and its USB subsidiary that is slated to commence in March 2022, pending regulatory approval. USB will provide Ocean trading management services and retail solutions in the future. The Ocean Casino Resort operates a roughly 1,400 guest room hotel / casino and is currently engaged in an expansion.

ELYS has indicated that it has a strong pipeline of potential customers and is optimistic that many will lead to signed agreements, particularly given the ability to leverage Grand Central to demonstrate the technology. Separately, Elys recently entered into a memorandum of understanding with the New York State Restaurant Association (NYSRA) to potentially add the company’s platform to NYSRA member restaurants to provide entertainment and additional revenue sources.

USB acquisition – benefits already coming through

Bookmakers Company US LLC (USB), which ELYS acquired in 3Q21, provided critical assistance with the Grand Central deployment and the Oceans deal, as noted. Management believes the USB acquisition will enhance its global growth strategy and the benefits of the USB risk management expertise to potentially benefit its blended hold.

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