Director, RaaS Research Group, Research as a Service (RaaS)

Research as a Service (RaaS)

Director, RaaS Research Group

Insightful Financial Models and Research Analysis

Connect to the right investors through smart and insightful financial models and research analysis.

Equity Bottom-Up

Betmakers Technology Group  / Equity Bottom-Up

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<h2>BetMakers Technology Group Ltd</h2>
<h3>FY22 off to a stunning start</h3>
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<p>BetMakers Technology Group (ASX:BET) is a B2B software services business providing racing, wagering and integrity data, software and hardware products to bookmakers, racing authorities and rights holders globally. The company is rapidly on a path to become a key player in the transforming US horse racing industry, which is poised to introduce fixed odds wagering, initially in New Jersey where BET has a 10-year exclusive licence with New Jersey Thoroughbred Horsemen Association and Darby Development LLC to deliver and manage fixed odds thoroughbred horse racing. BET reported Q1FY22 cash receipts of $20.95m, up more than four-fold on the cash receipts reported in Q1FY21 and 135% ahead of the cash receipts reported in Q4FY21. Excluding estimated cash receipts from the recently acquired Sportech business, underlying cash receipt growth was around 130% on Q1FY21 and 33% on Q4FY21, demonstrating the leverage this business benefits from as it adds new customers. The company reported an operating cash loss of $1.49m for the quarter following an increased investment in human capital to drive the opportunities BET is chasing in the US and internationally. We expect to see this investment translate into additional cash receipts and revenue in the coming quarters. BET has delivered 61% of our forecasted H1FY22 cash receipts and 53% of the costs we have factored into H1FY22 cashflow forecasts. We have increased our forecasts for employee and operating costs for FY22 resulting in a reduced EBITDA forecast but factored in the end of the MTS revenue share from July 1, 2022 which has had the effect of lifting our base case valuation to $2.35/share (previously $2.31/share).</p>
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<p><strong>Business model</strong><br>BetMakers operates a SaaS style model for its racing data and informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of three years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Racing and UK Greyhounds which are more aligned to share of turnover. The recently acquired Sportech business delivers additional SaaS-style revenues from its tote technology as well as a share of turnover from its tote operations. It also establishes BET as a pari-mutuel operator across 100 US racetracks, casinos and other venues in 36 states ahead of the opportunities to develop a fixed odds wagering business initially in New Jersey, which has been one of the leading states in the introduction of fixed-odds sportsbetting.</p>
<p><strong>Tracking to an annualised revenue run rate of $84m</strong><br>Based on the cash receipts delivered in Q1, BetMakers is tracking to an annualised revenue run rate of $84m, up from the ~$70m the company noted in July. Our revenue forecast for FY22 of $94.4m includes our expectation that fixed odds wagering will commence in New Jersey before the end of Q2FY22. In our view, our revenue forecasts for FY22 could prove conservative. We have made adjustments to our forecasts to reflect the capex on the new Betline terminals and additional staff hires which should translate to longer term sales.</p>
<p><strong>Base case DCF valuation is $2.35/share ($2.01b)</strong><br>Our base case DCF valuation is $2.35/share (previously $2.31/share) on the current share count and $2.09/share fully diluted for all options and performance rights on issue. Our forecasts capture estimates for the broader US fixed odds wagering opportunity and assumes that BET maintains the ~25% share of market currently commanded by the Sportech tote business except in NJ where it holds exclusivity for the next 10 years. We see key catalysts as the commencement of fixed odds wagering in New Jersey once the rules are defined by the relevant government agency and demonstrated expansion in both the US and international wagering markets.</p>
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BetMakers Technology Group Ltd
FY22 off to a stunning start





BetMakers Technology Group (ASX:BET) is a B2B software services business providing racing, wagering and integrity data, software and hardware products to bookmakers, racing authorities and rights holders globally. The company is rapidly on a path to become a key player in the transforming US horse racing industry, which is poised to introduce fixed odds wagering, initially in New Jersey where BET has a 10-year exclusive licence with New Jersey Thoroughbred Horsemen Association and Darby Development LLC to deliver and manage fixed odds thoroughbred horse racing. BET reported Q1FY22 cash receipts of $20.95m, up more than four-fold on the cash receipts reported in Q1FY21 and 135% ahead of the cash receipts reported in Q4FY21. Excluding estimated cash receipts from the recently acquired Sportech business, underlying cash receipt growth was around 130% on Q1FY21 and 33% on Q4FY21, demonstrating the leverage this business benefits from as it adds new customers. The company reported an operating cash loss of $1.49m for the quarter following an increased investment in human capital to drive the opportunities BET is chasing in the US and internationally. We expect to see this investment translate into additional cash receipts and revenue in the coming quarters. BET has delivered 61% of our forecasted H1FY22 cash receipts and 53% of the costs we have factored into H1FY22 cashflow forecasts. We have increased our forecasts for employee and operating costs for FY22 resulting in a reduced EBITDA forecast but factored in the end of the MTS revenue share from July 1, 2022 which has had the effect of lifting our base case valuation to $2.35/share (previously $2.31/share).





Business model BetMakers operates a SaaS style model for its racing data and informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of three years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Racing and UK Greyhounds which are more aligned to share of turnover. The recently acquired Sportech business delivers additional SaaS-style revenues from its tote technology as well as a share of turnover from its tote operations. It also establishes BET as a pari-mutuel operator across 100 US racetracks, casinos and other venues in 36 states ahead of the opportunities to develop a fixed odds wagering business initially in New Jersey, which has been one of the leading states in the introduction of fixed-odds sportsbetting.
Tracking to an annualised revenue run rate of $84m Based on the cash receipts delivered in Q1, BetMakers is tracking to an annualised revenue run rate of $84m, up from the ~$70m the company noted in July. Our revenue forecast for FY22 of $94.4m includes our expectation that fixed odds wagering will commence in New Jersey before the end of Q2FY22. In our view, our revenue forecasts for FY22 could prove conservative. We have made adjustments to our forecasts to reflect the capex on the new Betline terminals and additional staff hires which should translate to longer term sales.
Base case DCF valuation is $2.35/share ($2.01b) Our base case DCF valuation is $2.35/share (previously $2.31/share) on the current share count and $2.09/share fully diluted for all options and performance rights on issue. Our forecasts capture estimates for the broader US fixed odds wagering opportunity and assumes that BET maintains the ~25% share of market currently commanded by the Sportech tote business except in NJ where it holds exclusivity for the next 10 years. We see key catalysts as the commencement of fixed odds wagering in New Jersey once the rules are defined by the relevant government agency and demonstrated expansion in both the US and international wagering markets.













BetMakers Technology Group Ltd: FY22 off to a Stunning Start

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 100, <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> and S&amp;P/ASX300 as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.</p><p>The review period for the rebalance ends on 20 August, so there are only 3 days to go in the review period with 124 days completed.</p><p>For the ASX100, we see <a href="https://www.smartkarma.com/entities/boral-ltd" target="_blank" data-smartkarma-citation="entities:1487:1" rel="noopener">Boral Ltd (BLD AU)</a> as a potential deletion following the reduction in its free float following <a href="https://www.smartkarma.com/entities/seven-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:803:1" rel="noopener">Seven Group Holdings (SVW AU)</a>'s tender offer. This is the possibility of another change with <a href="https://www.smartkarma.com/entities/steadfast-group-ltd" target="_blank" data-smartkarma-citation="entities:8181:1" rel="noopener">Steadfast (SDF AU)</a> replacing <a href="https://www.smartkarma.com/entities/beach-energy-ltd" target="_blank" data-smartkarma-citation="entities:795:1" rel="noopener">Beach Energy (BPT AU)</a> in the index.</p><p>For the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a>, we see <a href="https://www.smartkarma.com/entities/pinnacle-investment-management" target="_blank" data-smartkarma-citation="entities:20624:1" rel="noopener">Pinnacle Investment Management (PNI AU)</a>, <a href="https://www.smartkarma.com/entities/sealink-travel-group-ltd" target="_blank" data-smartkarma-citation="entities:6400:1" rel="noopener">Sealink Travel (SLK AU)</a>, <a href="https://www.smartkarma.com/entities/de-grey-mining-ltd" target="_blank" data-smartkarma-citation="entities:6192:1" rel="noopener">De Grey Mining (DEG AU)</a> and <a href="https://www.smartkarma.com/entities/amalgamated-holdings-ltd" target="_blank" data-smartkarma-citation="entities:20978:1" rel="noopener">Event Hospitality and Entertainment (EVT AU)</a> as potential inclusions, while <a href="https://www.smartkarma.com/entities/nuix-limited" target="_blank" data-smartkarma-citation="entities:31040:1" rel="noopener">Nuix Limited (NXL AU)</a>, <a href="https://www.smartkarma.com/entities/nrw-holdings-ltd" target="_blank" data-smartkarma-citation="entities:9271:1" rel="noopener">NRW Holdings (NWH AU)</a>, <a href="https://www.smartkarma.com/entities/g8-education-ltd" target="_blank" data-smartkarma-citation="entities:581:1" rel="noopener">G8 Education (GEM AU)</a> and <a href="https://www.smartkarma.com/entities/westgold-resources-ltd" target="_blank" data-smartkarma-citation="entities:24269:1" rel="noopener">Westgold Resources (WGX AU)</a> are potential deletions.</p><p>For the ASX300, potential inclusions are <a href="https://www.smartkarma.com/entities/paladin-energy-ltd" target="_blank" data-smartkarma-citation="entities:10117:1" rel="noopener">Paladin Energy (PDN AU)</a>, <a href="https://www.smartkarma.com/entities/imugene-ltd" target="_blank" data-smartkarma-citation="entities:20276:1" rel="noopener">Imugene Ltd (IMU AU)</a>, <a href="https://www.smartkarma.com/entities/liontown-resources-ltd" target="_blank" data-smartkarma-citation="entities:20488:1" rel="noopener">Liontown Resources (LTR AU)</a>, <a href="https://www.smartkarma.com/entities/betmakers-technology-group-ltd" target="_blank" data-smartkarma-citation="entities:25489:1" rel="noopener">BetMakers Technology Group (BET AU)</a>, <a href="https://www.smartkarma.com/entities/novonix-ltd" target="_blank" data-smartkarma-citation="entities:29093:1" rel="noopener">Novonix Ltd (NVX AU)</a>, <a href="https://www.smartkarma.com/entities/dubber-corp-ltd" target="_blank" data-smartkarma-citation="entities:15396:1" rel="noopener">Dubber Corp Ltd (DUB AU)</a>, <a href="https://www.smartkarma.com/entities/johns-lyng-group-ltd" target="_blank" data-smartkarma-citation="entities:26649:1" rel="noopener">Johns Lyng (JLG AU)</a> and <a href="https://www.smartkarma.com/entities/strike-energy-ltd" target="_blank" data-smartkarma-citation="entities:12473:1" rel="noopener">Strike Energy (STX AU)</a>, while potential deletions are <a href="https://www.smartkarma.com/entities/bubs-australia-ltd" target="_blank" data-smartkarma-citation="entities:6296:1" rel="noopener">Bubs Australia (BUB AU)</a>, <a href="https://www.smartkarma.com/entities/synlait-milk-ltd" target="_blank" data-smartkarma-citation="entities:16298:1" rel="noopener">Synlait Milk (SML NZ)</a>, <a href="https://www.smartkarma.com/entities/integrated-research-ltd" target="_blank" data-smartkarma-citation="entities:6744:1" rel="noopener">Integrated Research (IRI AU)</a>, <a href="https://www.smartkarma.com/entities/maca-ltd" target="_blank" data-smartkarma-citation="entities:11390:1" rel="noopener">Maca Ltd (MLD AU)</a> and <a href="https://www.smartkarma.com/entities/medical-developments-international" target="_blank" data-smartkarma-citation="entities:18644:1" rel="noopener">Medical Developments International (MVP AU)</a>.</p><p>The impact is quite large on the <a href="https://www.smartkarma.com/entities/s-p-asx-200" target="_blank" data-smartkarma-citation="entities:22901:1" rel="noopener">S&amp;P/ASX 200 (AS51 INDEX)</a> expected changes while there could be a large impact on <a href="https://www.smartkarma.com/entities/steadfast-group-ltd" target="_blank" data-smartkarma-citation="entities:8181:1" rel="noopener">Steadfast (SDF AU)</a> if it is included in the ASX100.</p>

S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 100, S&amp;P/ASX 200 (AS51 INDEX) and S&amp;P/ASX300 as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.The review period for the rebalance ends on 20 August, so there are only 3 days to go in the review period with 124 days completed.For the ASX100, we see Boral Ltd (BLD AU) as a potential deletion following the reduction in its free float following Seven Group Holdings (SVW AU)'s tender offer. This is the possibility of another change with Steadfast (SDF AU) replacing Beach Energy (BPT AU) in the index.For the S&amp;P/ASX 200 (AS51 INDEX), we see Pinnacle Investment Management (PNI AU), Sealink Travel (SLK AU), De Grey Mining (DEG AU) and Event Hospitality and Entertainment (EVT AU) as potential inclusions, while Nuix Limited (NXL AU), NRW Holdings (NWH AU), G8 Education (GEM AU) and Westgold Resources (WGX AU) are potential deletions.For the ASX300, potential inclusions are Paladin Energy (PDN AU), Imugene Ltd (IMU AU), Liontown Resources (LTR AU), BetMakers Technology Group (BET AU), Novonix Ltd (NVX AU), Dubber Corp Ltd (DUB AU), Johns Lyng (JLG AU) and Strike Energy (STX AU), while potential deletions are Bubs Australia (BUB AU), Synlait Milk (SML NZ), Integrated Research (IRI AU), Maca Ltd (MLD AU) and Medical Developments International (MVP AU).The impact is quite large on the S&amp;P/ASX 200 (AS51 INDEX) expected changes while there could be a large impact on Steadfast (SDF AU) if it is included in the ASX100.

ASX100/200/300 Index Rebalance Preview: Big Impact & Large Shorts

<p>S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 300 Index as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.</p><p>We have 8 days to go in the review period. The index currently has 297 members, so there will be 3 more adds as compared to the deletes.</p><p>We see 8 potential inclusions at the review: <a href="https://www.smartkarma.com/entities/paladin-energy-ltd" target="_blank" data-smartkarma-citation="entities:10117:1" rel="noopener">Paladin Energy (PDN AU)</a>, <a href="https://www.smartkarma.com/entities/imugene-ltd" target="_blank" data-smartkarma-citation="entities:20276:1" rel="noopener">Imugene Ltd (IMU AU)</a>, <a href="https://www.smartkarma.com/entities/liontown-resources-ltd" target="_blank" data-smartkarma-citation="entities:20488:1" rel="noopener">Liontown Resources (LTR AU)</a>, <a href="https://www.smartkarma.com/entities/betmakers-technology-group-ltd" target="_blank" data-smartkarma-citation="entities:25489:1" rel="noopener">BetMakers Technology Group (BET AU)</a>, <a href="https://www.smartkarma.com/entities/novonix-ltd" target="_blank" data-smartkarma-citation="entities:29093:1" rel="noopener">Novonix Ltd (NVX AU)</a>, <a href="https://www.smartkarma.com/entities/dubber-corp-ltd" target="_blank" data-smartkarma-citation="entities:15396:1" rel="noopener">Dubber Corp Ltd (DUB AU)</a>, <a href="https://www.smartkarma.com/entities/johns-lyng-group-ltd" target="_blank" data-smartkarma-citation="entities:26649:1" rel="noopener">Johns Lyng (JLG AU)</a> and <a href="https://www.smartkarma.com/entities/strike-energy-ltd" target="_blank" data-smartkarma-citation="entities:12473:1" rel="noopener">Strike Energy (STX AU)</a>. </p><p>We see 5 potential deletions at the review: <a href="https://www.smartkarma.com/entities/bubs-australia-ltd" target="_blank" data-smartkarma-citation="entities:6296:1" rel="noopener">Bubs Australia (BUB AU)</a>, <a href="https://www.smartkarma.com/entities/synlait-milk-ltd" target="_blank" data-smartkarma-citation="entities:16298:1" rel="noopener">Synlait Milk (SML NZ)</a>, <a href="https://www.smartkarma.com/entities/integrated-research-ltd" target="_blank" data-smartkarma-citation="entities:6744:1" rel="noopener">Integrated Research (IRI AU)</a>, <a href="https://www.smartkarma.com/entities/maca-ltd" target="_blank" data-smartkarma-citation="entities:11390:1" rel="noopener">Maca Ltd (MLD AU)</a> and <a href="https://www.smartkarma.com/entities/medical-developments-interna" target="_blank" data-smartkarma-citation="entities:18644:1" rel="noopener">Medical Developments International (MVP AU)</a>.</p><p>Among the potential adds, shorts have risen sharply on <a href="https://www.smartkarma.com/entities/imugene-ltd" target="_blank" data-smartkarma-citation="entities:20276:1" rel="noopener">Imugene Ltd (IMU AU)</a> and <a href="https://www.smartkarma.com/entities/betmakers-technology-group-ltd" target="_blank" data-smartkarma-citation="entities:25489:1" rel="noopener">BetMakers Technology Group (BET AU)</a> while shorts have risen on <a href="https://www.smartkarma.com/entities/medical-developments-interna" target="_blank" data-smartkarma-citation="entities:18644:1" rel="noopener">Medical Developments International (MVP AU)</a> and <a href="https://www.smartkarma.com/entities/bubs-australia-ltd" target="_blank" data-smartkarma-citation="entities:6296:1" rel="noopener">Bubs Australia (BUB AU)</a> among the potential deletions.</p>

S&amp;P Dow Jones Indices will announce changes to the S&amp;P/ASX 300 Index as part of the September index review on 3 September and the changes will be effective after the close of trading on 17 September.We have 8 days to go in the review period. The index currently has 297 members, so there will be 3 more adds as compared to the deletes.We see 8 potential inclusions at the review: Paladin Energy (PDN AU), Imugene Ltd (IMU AU), Liontown Resources (LTR AU), BetMakers Technology Group (BET AU), Novonix Ltd (NVX AU), Dubber Corp Ltd (DUB AU), Johns Lyng (JLG AU) and Strike Energy (STX AU). We see 5 potential deletions at the review: Bubs Australia (BUB AU), Synlait Milk (SML NZ), Integrated Research (IRI AU), Maca Ltd (MLD AU) and Medical Developments International (MVP AU).Among the potential adds, shorts have risen sharply on Imugene Ltd (IMU AU) and BetMakers Technology Group (BET AU) while shorts have risen on Medical Developments International (MVP AU) and Bubs Australia (BUB AU) among the potential deletions.

ASX300 Sep 2021 Index Rebalance Preview: Changes Galore

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<h2>BetMakers Technology Group</h2>
<h3>It’s Official! New Jersey greenlights fixed odds wagering</h3>
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<p>BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. The company has announced that the New Jersey Governor has signed the Bill to “authorise fixed odds wagering on horse races” making it the first US state to do so. BetMakers holds an exclusive 10-year Fixed Odds agreement on thoroughbred horse racing in New Jersey. The agreement with the New Jersey Thoroughbred Horsemen Association and Darby Development LLC, operator of the Monmouth Park racetrack, will see BetMakers deliver and manage Fixed Odds thoroughbred horse racing into New Jersey. As the only US state currently offering Fixed Odds, we expect New Jersey to benefit from additional wagering inflows, particularly from punters who have become accustomed to Fixed Odds Sports Betting and who are comfortable with digital platforms. Fixed Odds Sports Betting has generated US$62.75b in handle from June 2018,, when it was first introduced, to July 31 with New Jersey, the first state to introduce, attracting US$16.7b, or 27%, outstripping every state including Nevada. In our recently published report, Eyeing the prize in the US wagering market, we upgraded our forecasts for BET on our estimates that the total US horse racing market could grow to US$86b within 10 years of the introduction of fixed odds, with fixed odds comprising 75% of total wagering. Our estimates, extrapolated to BET’s US business, resulted in our base case valuation lifting to $2.0b or $2.29/share.</p>
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<p><strong>Business model</strong><br>BetMakers operates a SaaS style model for its Racing Data and Informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of 3 years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Racing and UK Greyhounds which are more aligned to share of turnover. The recent acquisition of Sportech’s racing, tote and digital assets establish BET as a pari-mutuel operator across 100 US racetracks, casinos and other venues in 36 states. This combined with BET’s 10-year exclusive deal to operate fixed odds horse wagering in New Jersey position the company to be a significant player in the transforming US wagering market.</p>
<p><strong>New Jersey trailblazes again on Fixed Odds</strong><br>With the signing of the Fixed Odds Wagering Bill by the New Jersey Governor, the state is now open for business on Fixed Odds on horse racing. This means that any wagering operator in New Jersey who wants to bet Fixed Odds on horse racing must have an agreement through BetMakers, and this will ensure that returns from Fixed Odds Wagering flows through to the racing industry. Wagering operators outside NJ, domestically and internationally, will also be able to strike similar agreements.</p>
<p><strong>Base case valuation is $2.29/share</strong><br>Our forecasts have incorporated estimates for the rollout of fixed odds wagering in the US, commencing with New Jersey, which we estimate will have a two-year headstart. We assume BET maintains the ~25% share of market currently commanded by the Sportech tote business, except in NJ where its 10 year exclusivity should see it benefit from Fixed Odds Wagering turnover. Our DCF derived valuation of $2.29/share incorporates a WACC of 11.4% (beta 1.4, terminal growth rate 2.2%).</p>
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BetMakers Technology Group
It’s Official! New Jersey greenlights fixed odds wagering

BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. The company has announced that the New Jersey Governor has signed the Bill to “authorise fixed odds wagering on horse races” making it the first US state to do so. BetMakers holds an exclusive 10-year Fixed Odds agreement on thoroughbred horse racing in New Jersey. The agreement with the New Jersey Thoroughbred Horsemen Association and Darby Development LLC, operator of the Monmouth Park racetrack, will see BetMakers deliver and manage Fixed Odds thoroughbred horse racing into New Jersey. As the only US state currently offering Fixed Odds, we expect New Jersey to benefit from additional wagering inflows, particularly from punters who have become accustomed to Fixed Odds Sports Betting and who are comfortable with digital platforms. Fixed Odds Sports Betting has generated US$62.75b in handle from June 2018,, when it was first introduced, to July 31 with New Jersey, the first state to introduce, attracting US$16.7b, or 27%, outstripping every state including Nevada. In our recently published report, Eyeing the prize in the US wagering market, we upgraded our forecasts for BET on our estimates that the total US horse racing market could grow to US$86b within 10 years of the introduction of fixed odds, with fixed odds comprising 75% of total wagering. Our estimates, extrapolated to BET’s US business, resulted in our base case valuation lifting to $2.0b or $2.29/share.





Business model BetMakers operates a SaaS style model for its Racing Data and Informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of 3 years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Racing and UK Greyhounds which are more aligned to share of turnover. The recent acquisition of Sportech’s racing, tote and digital assets establish BET as a pari-mutuel operator across 100 US racetracks, casinos and other venues in 36 states. This combined with BET’s 10-year exclusive deal to operate fixed odds horse wagering in New Jersey position the company to be a significant player in the transforming US wagering market.
New Jersey trailblazes again on Fixed Odds With the signing of the Fixed Odds Wagering Bill by the New Jersey Governor, the state is now open for business on Fixed Odds on horse racing. This means that any wagering operator in New Jersey who wants to bet Fixed Odds on horse racing must have an agreement through BetMakers, and this will ensure that returns from Fixed Odds Wagering flows through to the racing industry. Wagering operators outside NJ, domestically and internationally, will also be able to strike similar agreements.
Base case valuation is $2.29/share Our forecasts have incorporated estimates for the rollout of fixed odds wagering in the US, commencing with New Jersey, which we estimate will have a two-year headstart. We assume BET maintains the ~25% share of market currently commanded by the Sportech tote business, except in NJ where its 10 year exclusivity should see it benefit from Fixed Odds Wagering turnover. Our DCF derived valuation of $2.29/share incorporates a WACC of 11.4% (beta 1.4, terminal growth rate 2.2%).









BetMakers Technology Group:  It’s Official! New Jersey Greenlights Fixed Odds Wagering

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<h2>BetMakers Technology Group Ltd</h2>
<h3>Record Q4 cash receipts, up 71% on previous quarter</h3>
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<p>BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. The company’s technology and systems are used by every racing authority in Australia and most of the major online bookmakers. BetMakers is not a gaming company, it is a technology company that is facilitating commercial opportunities for racing authorities, rights holders, and corporate bookmakers while providing an improved racing experience for punters. The company is rapidly on a path to become a key player in the US horseracing industry which is poised to introduce fixed odds wagering. BET reported Q4 FY21 cash receipts of $8.9m, up 71% on Q3 and 272% on the previous corresponding quarter, with just two weeks inclusion of the Sportech digital and tote assets. The company generated $0.65m positive operating cashflow in the quarter and finished with net cash of $120.6m. Cash receipts for FY21 were $21.97m, well ahead of our forecasts for $17.4m and the company ended the year operating cash break even. We are focused on BET”s international expansion opportunities including its exclusive 10-year fixed odds wagering deal in New Jersey and expansive footprint in the US pari-mutuel market. These underpin our $2.29/share base case valuation.</p>
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<p><strong>Business model</strong><br>BetMakers operates a SaaS style model for its Racing Data and Informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of 3 years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Racing and UK Greyhounds which are more aligned to share of turnover. The acquisition of Sportech delivers additional SaaS-style revenues from its tote technology as well as a share of turnover from its tote operations. It will also establish BET as a pari-mutuel operator across 100 US racetracks, casinos and other venues in 36 states ahead of the opportunities to develop a fixed odds wagering business initially in New Jersey, which has been one of the leading states in the introduction of fixed odds sports-betting.</p>
<p><strong>Sprint to the end of FY21</strong><br>BetMakers has reported better than forecast Q4 cash receipts of $8.911m and, as a consequence, positive operating cashflow of $0.65m for the quarter. Cash receipts were more than twice our expectations, up 71% on Q3 FY21 and 272% ahead of Q4 FY20. The result was driven by a significant increase in activity in the Australian market and the inclusion of approximately two weeks of cashflows from the Sportech racing, tote and digital business. The company ended the quarter and year with $120.6m cash.</p>
<p><strong>Base case DCF valuation is $2.29/share ($1.96b unchanged)</strong><br>Our base case DCF valuation is $2.29/share, after adjusting for one-third of the Waterhouse performance rights and another 9m options conversion to shares. Fully diluted for all options and performance rights on issue, the valuation is $1.94/share. Our forecasts capture estimates for the broader US fixed odds wagering opportunity and assumes that BET maintains the ~25% share of market currently commanded by the Sportech tote business except in NJ where it holds exclusivity for the next 10 years. We see key catalysts as the imminent formal signing of the NJ Fixed Odds bill and demonstrated expansion in both the US and international wagering markets.</p>
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BetMakers Technology Group Ltd
Record Q4 cash receipts, up 71% on previous quarter





BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. The company’s technology and systems are used by every racing authority in Australia and most of the major online bookmakers. BetMakers is not a gaming company, it is a technology company that is facilitating commercial opportunities for racing authorities, rights holders, and corporate bookmakers while providing an improved racing experience for punters. The company is rapidly on a path to become a key player in the US horseracing industry which is poised to introduce fixed odds wagering. BET reported Q4 FY21 cash receipts of $8.9m, up 71% on Q3 and 272% on the previous corresponding quarter, with just two weeks inclusion of the Sportech digital and tote assets. The company generated $0.65m positive operating cashflow in the quarter and finished with net cash of $120.6m. Cash receipts for FY21 were $21.97m, well ahead of our forecasts for $17.4m and the company ended the year operating cash break even. We are focused on BET”s international expansion opportunities including its exclusive 10-year fixed odds wagering deal in New Jersey and expansive footprint in the US pari-mutuel market. These underpin our $2.29/share base case valuation.





Business model BetMakers operates a SaaS style model for its Racing Data and Informatics platforms: Global Betting Services and DynamicOdds. Racing bodies and bookmakers pay a monthly recurring fee for access to the platforms with contract periods usually of 3 years’ duration. BetMakers also generates revenue from the content distribution deals it has in place with international racing authorities such as US Greyhounds and US Racing and UK Greyhounds which are more aligned to share of turnover. The acquisition of Sportech delivers additional SaaS-style revenues from its tote technology as well as a share of turnover from its tote operations. It will also establish BET as a pari-mutuel operator across 100 US racetracks, casinos and other venues in 36 states ahead of the opportunities to develop a fixed odds wagering business initially in New Jersey, which has been one of the leading states in the introduction of fixed odds sports-betting.
Sprint to the end of FY21 BetMakers has reported better than forecast Q4 cash receipts of $8.911m and, as a consequence, positive operating cashflow of $0.65m for the quarter. Cash receipts were more than twice our expectations, up 71% on Q3 FY21 and 272% ahead of Q4 FY20. The result was driven by a significant increase in activity in the Australian market and the inclusion of approximately two weeks of cashflows from the Sportech racing, tote and digital business. The company ended the quarter and year with $120.6m cash.
Base case DCF valuation is $2.29/share ($1.96b unchanged) Our base case DCF valuation is $2.29/share, after adjusting for one-third of the Waterhouse performance rights and another 9m options conversion to shares. Fully diluted for all options and performance rights on issue, the valuation is $1.94/share. Our forecasts capture estimates for the broader US fixed odds wagering opportunity and assumes that BET maintains the ~25% share of market currently commanded by the Sportech tote business except in NJ where it holds exclusivity for the next 10 years. We see key catalysts as the imminent formal signing of the NJ Fixed Odds bill and demonstrated expansion in both the US and international wagering markets.













BetMakers Technology Group Ltd: Record Q4 Cash Receipts, up 71% on Previous Quarter

Australia

Betmakers Technology Group Ltd operates as a software development company. The Company designs and develops odds comparison and intelligent betting platforms, as well as analytics and trading solutions. Betmakers Technology Group serves customers in Australia.

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