BetMakers Technology Group: Signs Exclusive 5-Year Deal for Fixed Odds in Jamaica
BetMakers Technology Group
Signs exclusive 5-year deal for Fixed Odds in Jamaica
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 signed exclusive agreements with Supreme Ventures Racing and Entertainment Ltd to manage Fixed Odds wagering on all racing at its venues and online in Jamaica and to distribute Jamaican racing from Caymanas Park, the Caribbean’s main thoroughbred race track, internationally. BetMakers will also sponsor and have the exclusive naming and branding rights to a new trainers pavilion at Caymanas Park. We have not incorporated this arrangement in our forecasts but note that there will be some initial capex (we estimate ~$300k) required for the rollout of Fixed Odds betting terminals and around $100k per year for the sponsorship deal, with revenue and earnings expected to commence in FY22. There is also longer term potential for BET to provide pari-mutuel wagering services to Jamaica through its expected acquisition of the Sportech racing and digital assets.
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.
Exclusive deal adds further edge to BET’s racing network
The exclusive 5-year deal will see BET manage Fixed Odds wagering for Fixed Odds bets placed on both Jamaican and international race meetings through Supreme Ventures’ online site, on track at Caymanas Park and at more than 100 Off Track Betting (OTB) shops across Jamaica. Currently Jamaica’s horse racing wagering sector is wholly pari-mutuel so this transaction is much like the arrangement that BET has struck in New Jersey with the Horseman Association and Monmouth Park. The opportunity is for BET to develop a Fixed Odds wagering handle to match the ~US$150m pari-mutuel handle generated currently in Jamaica. In addition to the FO managed trading services wagering deal, BET has secured the exclusive rights to distribute all racing data from Caymanas Park to international online wagering operators.
Base case valuation is $1.00/share fully diluted
Our DCF valuation is $1.00/share fully diluted for all in the money options. Based on the current share count of 700.25m which incorporates our expectation that the Sportech transaction completes, our base case DCF is $1.17/share.
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