BetMakers Technology Group: NJ Fixed Odds Wagering Bill Is in the House, Wait Is Over
BetMakers Technology Group
NJ fixed odds wagering bill is in the house, wait is over
BetMakers Technology Group (ASX:BET) is a B2B software services business focussed on servicing the wagering market and race operators globally. 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 has announced that it has received confirmation that a Bill to authorise “fixed odds wagering on horse races through fixed odds wagering system” has been introduced into the New Jersey Legislature. This is the news that the market has been waiting for and a crucial step to enable fixed odds wagering to commence in New Jersey, where BET has an exclusive 10-year agreement with the New Jersey Thoroughbred Horsemen Association and Darby Development LLC, operator of Monmouth Park racetrack. A key positive is that the Bill was introduced into the Senate with bi-partisan support. Our forecasts incorporate modest assumptions for the US fixed odds opportunity, with revenue generated making up just 10% of our long term forecasts.
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. Of its $9.2m in revenue in FY20, 67% was generated under the SaaS model. 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. Over time we expect the SaaS revenue share to average ~45-50% as the company expands its racing data and informatics platforms and new integrity platforms in both Australia and offshore.
Next legislative steps
The legislation has been introduced and supported by both parties and will now be put to public hearings before the Senate State Government, Wagering, Tourism and Historic Preservation Committee. Once the Bill is approved by a majority of both the Senate and General Assembly, it will be sent to the NJ Governor for consideration and, if approved, signature to become law, allowing anyone in NJ aged over 18 years to bet on fixed odds horse racing (versus 21 years for sports betting). While the Bill will take time to progress through the legislative process, it gives clarity to BET and its partners, Monmouth Park and the NJ Horsemen, and allows licenced wagering operators to set up and plan for the NJ Fixed Odds wagering opportunity. It also paves the way for other US jurisdictions to adopt fixed odds wagering and is a key step in the development of the US horse racing industry. Currently, the US racing opportunity accounts for just 10% of our revenue forecasts.
Base case valuation is $0.60/share fully diluted
Our DCF valuation is $0.60/share, fully diluted for all in the money options. On the current share count, our base case DCF valuation is $0.72/share. In our view, BET is well placed to deliver on its stated opportunities. We see potential upside from our current forecasts for BET’s role in the development of the fledgling US fixed odds wagering market.
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