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Newgioco’s ELYS Sportsbook offers licensed US operators cutting-edge betting technology

ELYS utilizes sophisticated technology-based risk management and adaptive business intelligence

Newgioco Group, Inc. - Newgioco’s Elys Sportsbook offers licensed US operators cutting-edge betting technology
Newgioco CEO Mike Ciavarella noted that ELYS has a slew of potential suitors which include tribal and non-tribal casino resort operators that want to add a "competent sports book system" to their properties

Newgioco Group Inc (NASDAQ:NWGI) CEO Mike Ciavarella has a game plan for winning in the US sports betting market: the company is launching its new ELYS Sportsbook platform with sports bar operators in Washington DC.

“There’s a lack of modern technologies in the data-driven world of sports betting. With ELYS, Newgioco presents one of the most modern, innovative, industry design-built betting technologies in the world,” Ciavarella told Proactive.

“We intend to play the long game,” added the former hockey coach, who made the transition from competitive sports to high finance, and then building a company that has the goods to beat the field in sports betting.

Newgioco’s ELYS platform helps licensed operators quickly analyze risk by using sophisticated tech-based risk management, processing technology and adaptive business intelligence.

Ciavarella believes the betting technology company’s experience in the tightly regulated Italian market will be “highly beneficial” in the sports betting market in the US.  

Proactive sat down with Ciavarella to learn more about Newgioco’s high-growth business, Italian consolidation and its steady US march.

Why will America be a major growth driver for Newgioco?

It’s worth adding some context to respond to this question effectively. We are certainly aware that after 10-to-15 years of prohibition, US sports fans are eager to not only legally wager on their favorite team or player, but also do so from the comfort of their own home or favorite sports bar. The repeal of the Professional and Amateur Sports Protection Act (PASPA) which outlawed sports gambling, has opened up one of the largest markets in the world.

Although sports betting is one of the biggest industries, there’s a handful of technology providers capable of offering an economically effective sports betting platform because of the risk nature of the product — Newgioco's ELYS is one of them.

There are two key factors that underlie growth drivers for Newgioco in the US which are worth unpacking. First, Newgioco has a well-established background as a professional, commercially licensed “leisure” bookmaker for over 20 years in the highly regulated Italian betting market. Second, the US market bears a strong resemblance to the Italian market so the US market is a natural evolution for Newgioco.

Therefore, the growth drivers in the US for Newgioco are extensive, not the least of which is the pent-up exuberance over the repeal of the prohibition of a natural past time that virtually every US citizen has a passion for — rooting for their favorite team or athlete from high school sports through professional leagues. This alone will drive a billion-dollar market potential that is transitioning from no betting to some form of betting, and more importantly shifting from illegal and offshore markets that pose risks to bettors, into legal providers like Newgioco.

The second key driver is the lack of modern technologies that exist in the data-driven world of sports betting. With ELYS Gameboard, Newgioco presents one of the most modern, technologies in the world. For potential sports betting operators, be it a commercial resort casino chain, a tribal casino operator or even the hundreds of thousands of corner stores and restaurant chain operators in the US that in due course will want to offer sports-betting as an ancillary confection, ELYS is a fully integrated, highly-scalable, turnkey solution.

So, as a betting technology company, you have an ace up your sleeve — your world-class betting platform ELYS. Please tell us how the ELYS Game Board by Odissea has been modified for the US market into the ELYS Sportsbook?

The main point to this question is that it’s more about the patience and preparation by our brilliant tech team at Odissea. Getting the ace up the sleeve to begin with required a good understanding of sports betting as a commercial offering first, and then having the experience to know that what worked well in Europe may not work in the US. The betting software needed not just to be tweaked or modified but rather, built in a completely separate environment because lines on US sports move differently from European lines, and displaying odds and offerings is completely different as well. The software needs to think like a bookmaker, not an accountant. ELYS is proven in Italy, generating strong bet holds, which means a more economically viable sports betting business model for potential operator customers of Newgioco.

To that end, preparing for the US meant more for Newgioco than just changing a comma to a dot, or placing the home team second in the line, rather than first. These are not just cosmetic but rather critical functions, because it could lead to errors that can be either unfair to the player and/or detrimental to the operator. As pointed out, both our innovative ELYS platform and Newgioco’s know-how and experience are a proven end-to-end solution that US gaming operators can count on to effectively offer sports betting as a product in their establishments.

Who is the ELYS Sportsbook aimed at?

ELYS has a range of potential suitors, not the least of which are established tribal and non-tribal casino resort operators that wish to add a competent sportsbook system into their properties in such a way also that they can control the product rather than farm it out to a third-party bookmaker. Secondly, we see the US market developing in a way where independent and franchise concession and general store operators, sports bars, pubs, restaurants and other retail venues such as fitness centers, deli coffee shops and online entrepreneurs could offer sports betting in the coming decade. ELYS does the job, it is designed for this business model and is already proven effective.

How does your Washington DC plans fit into your plans to scale in the US?

We came into the US with a patient yet strategic plan. That patience sometimes is hard to understand for many unfamiliar with the industry, but it is based on knowing what sports betting is as a product. This business is not about capturing every single customer as fast as you can, it is about balance.

ELYS is built from the ground-up on a micro services architecture on the latest Microsoft dotNet core technology, rather than monolithic framework which is the core of most legacy platforms that are laden with technology debt. This architecture gives ELYS extraordinary flexibility to scale on a limited footprint as demonstrated by our Italian distribution of almost 2,000 locations managed from a central dashboard.

Remarkably, the DC market is a perfect fit for our first US location because the Class B model closely resembles the European distribution model. It is very local business-friendly and makes perfect sense for leisure betting.

Our plan is to set up two “showcase” points, one for tribal and the other for non-tribal casino resort operators. The first with Northern Winz Casino in Montana is one such example and we are working towards a similar non-tribal relationship in DC with Grand Central DC that give us a chance to demonstrate ELYS in a live, real-money operation. We are confident that live ELYS demonstrations will result in rapid market adoption.

Have you been consolidating in your core market in Italy?

Yes, this has definitely been happening as evident in Newgioco’s organic growth over the past few years and is accelerating as the gaming regulator in Italy is manoeuvring to bar entry to foreign, unlicensed operators in this very attractive market. We see our consolidation strategy accelerating over the next 24 months as the next planned license tender in Italy is expected to fall in 2022.

Newgioco has a very well-organized network in Italy with a highly recognized brand and more importantly, is home to ELYS. Certainly, the Italian market itself is growing primarily in the online channel as fewer traditional land-based bet shop venues exist. The popularity of in-game betting is an important factor in this transition. The popularity and adoption of ELYS is evident in the continuous growth in Newgioco’s betting handle. We expect to see measurable growth in market share as foreign operators exit Italy and our ELYS Auxiliary Wagering System gains ground throughout the territory.

The $3.3 billion stock market listing of DraftKings heralds a new era for online sports betting in the US. Does it put the spotlight on companies like Newgioco that are flying under the radar?

Certainly, several multi-billion dollar transactions like DraftKings, Penn/Barstool, Caesars/William Hill, as well as other go public transactions like GAN and incumbents like PointsBet, the Score, Kambi, Flutter and FanDuel have brought positive attention to the space here in the US with these listed companies trading at strong multiples ranging from 9x to 50x plus revenue.

Newgioco is currently trading at less than 1x revenue and remains a pure-play bargain but we strongly believe that will change once we open our first US deployment. I think it is a question of the market gaining an understanding of the different business models between the likes of DraftKings, Penn, GAN, Newgioco and other such entities. As you noted, DraftKings did usher a new era of capital awareness to the space and we see a rebalancing of capital cycling into industry technology strengths such as ELYS going forward as well.

Contact the author Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive

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