Elys Game Technology (NASDAQ:ELYS) stock is higher by 31 percent in midday, residing at its highest levels in more than five months. That’s after the company landed a sports betting permit in Washington, DC.
Reports don’t indicate when the Canadian gaming technology provider will officially launch in the US capitol city. But with the 2021 NFL season scheduled to start on Sept. 9, the operator could capitalize on at least part of the football season. The Washington Football Team is the most popular professional sports team in the city.
The Elys permit in Washington, DC may be the result of the company’s acquisition of Bookmakers Company US, which was announced in early July. At that time, it was revealed the company, known as US Bookmaking (USB), has a service agreement in Washington, DC that goes into effect later this year.
Elys Game Technology is paying $12 million in cash and equity for USB. But that figure could swell to $53.8 million due to various earnings clauses contained in the agreement. The acquisition is viewed as a centerpiece of the Canadian operator’s US expansion efforts.
Good Timing for Elys DC Entry
With a market capitalization of just under $101 million, Elys is one of the smaller publicly trading companies with sports wagering exposure. That confirms that any contract win or market entry could potentially be material for the shares.
However, news of the company’s move into Washington, DC looks particularly well-timed, because controversy continues swirling around DC Lottery’s Gamebet mobile app. The platform endures wide criticism for hanging shoddy lines. For example, a game where the favorite is -110 (bet $110 to win $100) at a traditional sportsbook could be offered at -130 or higher by Gamebet.
The criticism and controversy swirling around Gamebet aren’t dying down. In fact, it’s escalating. In a Monday article, the Washington Post reports that when sports betting went live in the nation’s capitol, Gamebet was projected to generate $22 million in revenue for the city in fiscal 2021. That forecast was later slashed to $6 million. But by May of this year, the revenue figure stood at a scant $230,000.
A series of tweets yesterday by Dan Steinberg, digital sports editor at the Post, and replies to those tweets underscore the issues leading to Gamebet’s woes. It’s not just bad lines. Users also complain about long wait times to get paid on winning bets and a cumbersome sign-up process, while expressing concern that DC Lottery is collecting too much personal data through the app.
Opportunity for Elys
Gamebet’s woes are opening the door for other operators, and Elys could capitalize on that trend. For example, BetMGM and Caesars are live in the District and widely preferred by local sports bettors. But there are some geographic issues pertaining to those firms.
Some sports bettors in DC simply eschew the headaches with Gamebet and head to Virginia to place their wagers.
For Elys stock, more upside could be available if the operator can substantiate its finding success in Washington, DC. Investors are displaying some enthusiasm for that prospect, as highlighted by the fact that the shares are up on volume that’s more than 25 times the daily average.