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NASDAQ:ELYSFRA:3UWNEO:ELYS
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Elys Game Technology poised with platform, technology and experience to break into US markets

Snapshot

In June, 2020, the company formed a new wholly-owned subsidiary, Elys Gameboard Technologies LLC, the vehicle to expand its sports betting operations into the US

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Quick facts: Elys Game Technology Corp

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NASDAQ:ELYS

Price: 5.1 USD

Market Cap: $118.75 m
  • Aiming to become premier betting platform provider for licensed operators across global markets
  • Pushing into the US sports betting market
  • Experience in highly regulated Italian market

What Elys Game Technologies does:

Elys Game Technology, Corp. (NASDAQ:ELYS) (NEO:ELYS) is an interactive gaming and sports betting technology company that changed its name from Newgioco Group in November 2020.

The new name came with a change of CEO to Matteo Monteverdi and a more focused and energetic team to help unlock the global potential of the company’s leading-edge gaming and betting software.

The Toronto-based group offers operators an innovative platform that can be used for sports wagering, virtual games, lottery and casino games. Its betting platform provides both B2B (business to business) and B2C (business to consumer) bet processing. It can manage tens of thousands of pre-match events and more than 200 live events.

Elys' unique technology begins with offering a shop-client architecture so that casino and gaming operator businesses can offer their own product line-up and be their own bookmaker without having to farm it out to a franchise bookmaker. The company also assists retail operators in understanding end-user needs and relates this data back to gaming product and technology. 

The company currently makes 100% of its revenues from Italy but is looking to break into the US market following deregulation. In May 2019, the US Supreme Court decided to overturn a federal law, which banned gambling on football, basketball, baseball and other sports in most states, giving states the go-ahead to legalize betting on sports.

The group has been in the Italian market since the early 1990s, mainly in the south and mid-region but it expects to expand into the northern cities and follow the top Tier football league (the Serie A), which features clubs like Juventus and Milan. The online market in Italy is highly regulated and having successfully navigated that territory, Elys believes that should make it easier for the company to break into the US. 

In June 2020, it formed a wholly-owned subsidiary, Elys Gameboard Technologies LLC, which is the vehicle to expand its sports betting operations into the US, and it is already under contract in several states. The company is pursuing its first sports betting license in Washington, DC and anticipates launching its new US sports betting platform with its first US operator client, Handle 19 Inc, in the Capitol Hill area.

How is it doing:

Elys Game Technology is continuing to progress towards its launch in the US.

In February 2021, Elys revealed that it had extended its strategic partnership with Sportradar ahead of the launch. Under the terms of the new agreement, the company will gain access to official pre-game and in-play data for major US sports from Sportradar, the leading global provider of sports betting and sports entertainment products and services.

Elys noted that the new partnership affords the company the ability to offer a wide array of live, in-game wagering options at its planned future US retail sports betting locations, commencing in Washington DC, with an expected launch in the coming months.

At the start of January, the company announced that it had joined the US National Council on Problem Gambling (NCPG) to further the development and implementation of responsible gambling practices. The NCPG is a leading US non-governmental organization (NGO) serving as the national advocate for programs and services to assist people and families affected by problem gambling. 

Later that same month, Elys announced the engagement of international investor relations firm, Emerging Markets Consulting, LLC (EMC), to its expanding corporate communications team of investor relations and branding specialists.

Aside from the US, in March, Ely said it was continuing to monitor legislative developments to legalize single-event sports betting in Canada. Two proposed bills concern changes to the federal criminal code aimed at decriminalizing single-event sports betting. The proposed changes would allow provinces and territories to regulate and license single-event sports betting, potentially paving the way for lucrative opportunities for private businesses and service providers to access a legalized market in Canada.

On the financial front, on April 13, Elys revealed that it clocked up annual revenue of $37.3 million for the year ended December 31, 2020, which was a record for the company. It also said it had a solid balance sheet with over $18.9 million of cash as of December 31, 2020

In January the company had said that its preliminary, unaudited net gaming revenue rose by 26% to approximately $13.1 million during 4Q 2020, compared with $10.4 million for the same period a year earlier. The company also noted then that it grew 56% in 4Q 2020 by gaining market share in the highly-competitive Italian market, which experienced 37.5% year-over-year growth in online sports betting, while further strengthening its competitive position in the mobile and online channel. Elys added that its web-based gross gaming revenue for quarter surged by about 69% year over year.

At the end of December 2020, Elys shares commenced trading on the NEO Exchange under the symbol 'ELYS.' The company, which has been listed on the NASDAQ Capital Market since December 27, 2019, also trading under the same symbol, noted that the launch marked the first dual-listing of a publicly-traded technology company from the NASDAQ Capital Market to the NEO Exchange.

The NEO Exchange is home to over 100 corporate and ETF listings, and consistently facilitates more than 13% of all Canadian capital markets trading volume. Investors in Canada can trade shares of NEO:ELYS through their usual investment channels, including discount brokerage platforms and full-service dealers.

Inflection points:

  • Launch into US markets
  • Legislative moves in Canada
  • Ongoing growth in core Italian market

What the analyst says:

In December 2020, Proactive technology analysts Richard Jeans issued a report on Elys Game Technology noting that the company "has big ambitions in the growing global gaming markets but has been under the radar of most investors.”

Jeans pointed out that Elys has hired industry veteran Matteo Monteverdi as CEO to lead the charge, with an initial focus on expanding in the newly regulated US sports betting market.

He noted: "The initial plan is to target food and beverages establishments (eg, sports bars) in Washington DC, operating on a B2B2C revenue share basis, and the first deal is planned with the Grand Central sports bar. Elys and Grand Central have filed a joint application for management service provider (MSP) and Class B sports betting licenses in DC.

"Meanwhile, Elys is rolling out a new automated teller kiosk, Enjoy, in the Italian market that enables online players to set up new gaming accounts and perform wallet transactions. Enjoy has the potential to drive substantial revenue growth, and could also be deployed in other markets."

Jeans said: "The outlook is supported by a favorable regulatory backdrop, strong underlying market growth and hence significant growth opportunities. Following the recent stock rally, the company has an enterprise value of around US$84m and trades on around 2.4x sales. We believe the shares have substantial upside if management can successfully scale the Elys Gameboard platform in the US and beyond."

The analyst concluded that Elys shares represent "an option on a significant opportunity."

For a full copy of the report, investors can use the following link: https://ca.proactiveinvestors.com/companies/news/937177/best-game-in-town-937177.html/long

What the boss says:

In the April statement reporting the company's 2020 results, Elys Gaming executive chairman Mike Ciavarella said: “Through product preparedness with the build-out of our ELYS US platform, strategic selection of customers and the sequence of states in which to open, we expect that 2021 could represent a major inflection point for the Company."

"Elys is led by a highly experienced team, with a cutting-edge betting technology that we are confident can be quickly adopted by B2C operators throughout the U.S., and we continue to believe that our disciplined go-to-market strategy could extract long-term value for our investors and shareholders,” he added.

Contact the author at jon.hopkins@proactiveinvestors.com

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