Neo Games – the market-leader in providing a white-label product to run lotteries from. In the US lotteries are run by the state, but its illegal in all but 9 states currently. With COVID putting a lot of states in a bad financial situation, legalisation of lotteries will provide a way for states to make some money. Neo Games has helped Michigan to produce the most successful state lottery in the US today, and will attract the attention of other states as they legalise state lotteries and look to Neo Games to help them run the software. Neo Games takes a cut of all the money pooled in, so huge opportunity here for a company worth less than $1B.
Skillz – an online platform where people can bet real money to play pretty much any mobile game you can think of. Skillz brings the players together and takes a cut of all the money gambled while awarding prizes to winners. Very expensive very hyped stock at $25 a share.
DraftKings – started out as a platform where fantasy sports players could bet real money to play against each other for prize-money. It is now one of the leading players in sports betting which is growing rapidly as it becomes more legalised across the US. Very expensive very hyped stock at $50 a share, as there is and will be a lot of intense competition in this space. Their nearest competitor is FanDuel owned by Flutter Entertainment (below), and I believe Flutter to be a much better bet than DraftKings.
Flutter Entertainment – started out as Paddy Power in the UK which is the largest sports betting company there. They have since acquired one of their big rivals in BetFair, another big player in the UK sports betting market. They also own SportsBet, one of the biggest sports betting companies in Australia. Their big source of opportunity is in FanDuel, which they recently acquired. FanDuel is neck-and-neck as the market leader in US sports betting with DraftKings. Flutter is a much more reasonable valuation than DraftKings, whilst also having a management team that is very experienced in the field of sports betting, as seen in their dominance in the UK and Australia. This will be very valuable expertise as sports betting is a very competitive industry, something which investors are failing to apprecite.
Genius Sports – this company processes data and statistical analysis to produce sports betting odds for book-makers in the US. For each sports betting company to do this themselves would prove too costly, so instead they out-source this to the likes of Genius. The book-maker can modify what they want their odds to implicate, but the core source of the odds in the first place come from Genius Sports. They have only one other major competitor in the form of SportsRadar who have been working in Europe for a while. While many sports betting companies are young and small in the US, a significant majority of them will likely utilise Genius’ services for their first few years, but there is always the risk that later on they may choose do it themselves.
Lottery.com – an online marketplace that connects lottery providers with consumers – lottery.com hosts all the lotteries taking place at any given time, and users can browse the options and buy their tickets through the platform – taking a cut of the transaction for bringing the buyer and seller together. This is hugely beneficial in an industry which is very fragmented (in the US). How profitable can this be? Last quarter they had 50% operating income margins, that’s while growing 200% year-on-year – so while still investing heavily for growth, they managed such juicy profit margins.