As of right now, 20 states in the US have recently legalized sports betting and another 5 have approved legislation to do so. Sports betting is booming and already becoming a top trend of the 2020s. Traditional ways of having to gamble on sports at a brick and mortar are over. That’s where GAN Limited (Nasdaq: $GAN) comes into play.
Who is GAN Limited?
GAN Limited is a company in the Casino and Gaming sector who is gaining momentum under the radar as a key software technology platform for brick and mortar casinos. GAN’s key focus is partnering with casinos to provide a software solution quickly to help companies ramp up & take advantage of mobile gambling by launching their own branded platforms.
The company has been around since the early 2000s, but only recently gone public through an IPO on May 4th, 2020. The original offer price was $8.50. Since IPO, the stock price has grown to $30 per share. With only 19 states fully legalized sports betting and a ~$1B market cap, GAN has more room to grow.
GAN Product Offerings
GAN Limited offers the following software solutions:
- Real Money iCasino
- Sportsbook (CoolBet Acquisition)
- Play for fun Simulated Gaming
- Loyalty Integration
- Marketing & Analytics Services
- Custom Game Development
With to the legalization of sports betting in combination with the rise of 5G technology, GAN Limited’s product suite is spot on for the mobile gambling & gaming trend. Now as soon as a customer leaves the casino doors, GAN’s platform can help Casino’s support continued gameplay all from a smartphone.
In terms of loyalty integration, GAN Limited owns a key patent expiring in 2034. The patent is for the integration framework of land-based and online casino rewards programs. Meaning, current casinos will not have to start over with loyalty programs and can easily integrate into the software platform.
One other point to highlight is shortly after IPO, GAN Limited purchased CoolBet for $175M in cash and equity. CoolBet was the final piece of the software suite puzzle that GAN needed, a sports betting engine.
Prior to the acquisition, GAN Limited did not have a mobile sportsbook solution and CoolBet solved that problem. The acquisition also diversified the company’s reliance of 87% revenue out of the United States to now 50% United States and 50% international.
Revenue Highlights & Q4 Earnings Expectations
GAN Limited is expected to announce Q4 2020 earnings on February 15th, 2021 based on prior years. Although the company is still not expected to be profitable based on expectations, it does not have the attention of many mainstream media outlets or analysts.
From my understanding, Q4 2020 will be the first quarter to represent both CoolBets + GAN Limited Revenues*. Below is reflecting both companies revenue together and also what the expectations are from a revenue standpoint for Q4 2020 (+$11.8M). The expected EPS is -$0.06 per share.
Charting both companies together, if GAN Limited ends the quarter profitable, it would be an earnings surprise. Pair the pandemic & sports betting legalization together, GAN has been an underrated opportunity even with the recent rise in stock price.
At the time of publication, the author of this article holds shares of GAN.
*EDIT: GAN deal with CoolBets closed in January 2021 & Q4 will not include combined revenues. However, chart above is the revenue for both companies combined.