Online lotteries and gaming have become big business globally (estimated to be US$42 billion by the end of 2015), and with the success of Canadian companies such
Amaya Inc. (
TSX: AYA) investors have been looking to find the ‘next big thing’ in this space. So much so, in fact, that companies such as
The Intertain Group Limited (
TSX: IT) and
NYX Gaming Group Limited (
TSXV: NYX) have seen its stock prices bid up in recent months.
One Canadian company that investors should take a look at is
Contagious Gaming Inc.(
TSXV: CNS). Contagious shares are trading at just $0.46 with a market capitalization of about $34 million.
Contagious Gaming provides software solutions for regulated gaming and lottery markets around the world. Its management team includes the co-founders of Goal Time, the world’s first live in-play, pool based, sports betting system,and the company’s current portfolio consists of 21 proprietaryeInstant lottery games and the only remote in-play lottery style, sports betting platform in the market. It is important to note, especially from a regulatory standpoint, that Contagious doesn’t take or make any bets – that’s the bookmaker’s job. Contagious’ software merely facilitates the transactions and the company has no knowledge of the bets being made.
Many of the company’s games require industry partnerships to distribute and supply the information needed for in-play betting. Contagious already has a number of these partnerships in place. In fact, the company has been selected by GTECH and Scientifics games to be one of its third-party development partners for the U.S.eInstant lottery.
The UK Gambling Commission has licensed Contagious Gaming’sSports Lottery Platform, and the company has a partnership with Trinity Mirror PLC to exclusively provide its in-play sports betting platform for soccer in the UK, allowing participants to place wagers during the games. All of this soccer data is supplied via an agreement with Satellite Information Services to be their exclusive soccer lottery platform partner.
Contagious also announced recently an agreement to acquire Chelbis Company Ltd., which operates successful bingo websites with a primary focus on the UK, managing over $3.4 billion in wagers since its creation in 2007. This new acquisition will increase Contagious Gaming’s ability to distribute its gaming portfolio, add a new revenue stream, and potentially increase its market share.
Newsletter writer Bob Moriarty of
321gold.com provided some excellent insight into the Contagious Gaming story, believing the company could be earnings its current market capitalization in just a couple of years. He said Contagiousis paying about $4 million (mostly in stock) plus two years profit to acquire Chelbis, which earned $2.3 million in 2013. That equates to about 4 times earnings, a “pretty good deal” in his opinion. Mr. Moriarty added that Contagious intends to acquire as many small gaming companies as possible (
Read his entire article here).
Global Securities also recently initiated coverage of Contagious Gaming stock with a ‘Speculative Buy’ rating and target price of $1.35 per share, based on the company’s expected fiscal 2017 earnings per share as well as the fact that Contagious has a first mover advantage in both of the segments in which it operates.