Internet betting portal Gambling.com updated the terms of its initial public offering (IPO), noting it will sell 5.25 million shares at $11 to $13 apiece.
At the midpoint of that range, the company will have raised $63 million. The firm will list shares on the Nasdaq Stock Market under the ticker “GAMB.” Gambling.com, which publishes content in North America and Europe, does not directly provide betting products and services. Rather, it’s an affiliate marketer, generating revenue by referring consumers of its content to regulated wagering sites.
We generate revenue by referring online gamblers to online gambling operators. When an online gambler visits an online gambling operator from one of our websites, registers a new account and makes a deposit, this online gambler becomes one of our referred players,” said the company in an updated Form F-1 filing with the Securities and Exchange Commission (SEC). “Each of our referred players entitles us to remuneration pursuant to our agreements with the online gambling operator. Our agreements are primarily based on a revenue share model, a Cost Per Acquisition model (also referred to as CPA), or a combination of both.”
Gambling.com runs 32 websites in six languages across 13 countries. The primary focus of the content published by the company is iGaming and sports wagering.
Gambling.com Solid Financials
Upon coming to market, Gambling.com will likely fit the bill as a small-cap growth stock and reside in that territory for some time.
That’s not a strike against the company. However, small-cap growth names — regardless of industry — usually lose money, forsaking profitability in the name of growth. For its part, Gambling.com doesn’t fall into that potentially volatile category. The company was net income positive in 2020 following a modest loss in the prior year and in each of the past two years, it was cash flow positive.
“We had revenues of $11.00 million, $19.00 million, $19.27 million, and $27.98 million in 2017, 2018, 2019 and 2020, respectively. We achieved a revenue compound annual growth rate of 35 percent from the period of 2017 to 2020,” according to the regulatory filing.
Ambitious Forecasts
Recently, shares of internet casino and online sportsbook operators are slumping. But analysts remain broadly bullish on the industries. That thesis revolves largely around more states permitting sports betting and iGaming.
Gambling.com believes if all 50 states sign off on both activities, internet casinos will generate $43 billion in revenue while online sports wagering will account for $43 billion.
“We assume that, at market maturity, 65 percent of the legal US population will have access to legal online sports betting, and 30 percent will have access to legal iGaming,” according to the company. “Applying these estimates to the market at 100 percent legalization implies online sports betting and iGaming market sizes of $17 billion and $13 billion at maturity, for a combined U.S. online gambling market size at maturity of approximately $30 billion.”
Last year, Gambling.com worked with operators including DraftKings, FanDuel, Golden Nugget Online Gaming, Rush Street Interactive and William Hill, among others.
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