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By M. Marin
Elys Game Technology (NASDAQ:ELYS) recently announced 2020 results. Turnover, or betting handle, has grown from about $122 million in 2016 to $574 million in 2020, which represents a CAGR of 47% as the company’s expansion accelerates. Despite the impact of COVID-19, 2020 turnover of $574 million was up 26.5% compared to $454 million in 2019, as ELYS has both expanded its bricks-and-mortar footprint and intends to integrate with a growing number of online operators.
Benefits of Omni-Channel Strategy
The 2020 turnover metric represents an important milestone for ELYS, as it meets its $500+ million target despite the challenges of the global pandemic. The company’s ability to reach this level also validates its omni-channel strategy that combines both online and land-based retail betting.
Players have shifted from bricks-and-mortar to online during the pandemic, with the advance in web-based gross gaming revenue. ELYS’s turnover is expected to continue to rise as the company pursues expansion initiatives. Management believes the Elys platform is highly scalable and can continue to support its growth initiatives and expansion, reflecting the company’s entrance into new markets combined with potential M&A transactions and the anticipated growth of the e-sports sector.
International Expansion Advancing, With U.S. Launch Expected in 2021
The company operates in the international leisure gaming industry and is a licensed gaming operator in Italy, offering a variety of lottery, casino and sports betting options there through both an onsite physical retail channel and a digital platform via its proprietary betting software, the Elys Game Board, that is integrated with a built-in player gaming account management system and sports book. We believe recent initiatives highlight the importance of the company’s growth strategy and of the North American market to that growth strategy.
The company targets expansion in North America and has laid the infrastructure for operating in what is expected to be a rapid growth market by opening a North American office, expanding its management team and forging relationships with local operators. In the U.S., inaugural markets for Elys are Montana and Washington, DC. ELYS has formed agreements with both tribal and non-tribal gaming operators in both markets to deploy the Elys platform in both channels, subject to Elys obtaining the required regulatory certification, licensing and approvals. ELYS targets launching operations in Washington, D.C. in 2Q21, subject to licensing applications achieving approval.
Industry forecasts support expectation of significant market opportunity in the U.S. For example, Morningstar forecasts that U.S. sports betting can reach $6.2 billion in industry revenue by 2024. Other industry forecasts are even higher, supporting ELYS’s expectation that the U.S. sports betting and online gaming market represents a sizable opportunity for its platform.
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