Gamble on Online Betting: Gan PLC and Draftkings

05/15/2020 5:00 am EST


Peter Mantas

CIO, Logos LP

We rarely buy IPOs — but any IPO listing during a depression/recession should be considered — as the decision to list suggests significant buyer demand and thus potentially attractive business models, notes Peter Mantas, a value oriented money manager Logos LP.

Two such opportunities of interest have presented themselves of late.   


Gan provides a SaaS solution to US casinos and online sports betting operations, which is currently a greenfield space as the US is only starting to open up to online sports betting and iGaming nationally.

Their end-to-end solution is focused on everything from account management to payment processing to setting up betting lines. The company is growing at a pretty rapid clip (+145% YoY revenue growth in 2019) and has a high single digit take rate on every dollar won by casino operators.

Gross margins are around 64% and we expect this to shoot up as revenue starts to materially increase into 2025. It is really one of the only providers in software and development services, and also has a US patent for their US casino management platform.

Draftkings (DKNGW)

One of the largest US operators in online betting and owner of SBTech — which is a B2B online betting platform — Draftkings is still in early days with a huge total addressable market (over $20 billion for online sports book in the US alone).

Disney (DIS) recently bought a 6% stake in the company (presumably to position iGaming with ESPN in some capacity). Draftkings  is trading at around 3.4x EV/Estimated 2021 revenues which is less than internet consumer companies with less growth and smaller total addressable markets.

Interestingly, SBTech and Gan have already made a strategic partnership once US states start legalizing online sports betting en masse.

We expect 30%+ revenue growth and roughly 30% contribution margin at least into 2025 as it continues to lead in market share in the US (currently owns 35% market share of online sports bookmaking in New Jersey).

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