the Betmakers Technology Group Ltd (ASX:BET) The stock price came out of a trading halt on Thursday with news of a major deal.
The bettors will provide technology and services to a new betting business – operated by a consortium of press company (ASX:NWS); Tekkcorp Capital, led by Betmakers’ largest shareholder, Matt Davey; and TGW, a trust that counts gaming entrepreneur Matt Tripp among its investors.
As of Thursday’s close, Betmakers’ stock price was 78 cents, 20.93% higher than its previous close.
Let’s take a closer look at the news that has the market excited about the betting technology developer and provider.
Punters split launch price on major deal
Betmakers’ share price skyrockets on news that the company will be involved in a new betting venture.
The company – so far dubbed NTD – plans to operate a new online betting product in Australia and New Zealand. Its launch is scheduled for the second half of 2022.
The company has entered into an exclusive 10-year agreement to provide platform technology and corporate betting solutions.
The deal will provide multiple revenue streams over its lifespan and could result in more than $300 million in revenue.
To get to the bottom of it, Betmakers will receive a $2 million platform setup fee.
It will also receive a launch development fee of $500,000 per month between signing and go-live date. The go-live date is expected to be within the next six months.
From there, it will receive at least $7.5 million each year, increasing with the CPI each year, for development and services.
Finally, bettors will receive an annual fee based on a revenue sharing agreement.
The deal will initially represent 25% of the company’s net in-game revenue. However, the share of punters will drop by 1% each year as the business evolves.
The revenue-sharing agreement will also be subject to an initial annual cap of $20 million. This cap will increase by 10% each year for eight years and by 5% each year thereafter.
Thus, the last year of the agreement, Betmakers could receive 43 million dollars.
In total, the revenue-sharing agreement represents approximately $313 million in potential revenue over its 10-year lifespan.
Additionally, the deal in its entirety will bring in a minimum of approximately $80 million in revenue over its lifetime.
What did management say?
Commenting on the deal that fueled Betmakers’ share price today, CEO Todd Buckingham said:
We are delighted to have entered into this historic agreement to be the [business-to-business (B2B)] betting technology provider to a consortium with such high caliber investors, including a global media giant and two betting experts, Matt Tripp and Matt Davey…
We believe this validates our strategy and supports our view that the end-to-end B2B solution provided by the company is an efficient and commercially viable way to successfully launch a betting platform into the global betting markets. ‘today.
What else did Betmakers announce?
There are two other events announced by Betmakers today which could, conceivably, have an impact on its share price.
First, the company announced that, under a previous strategic advisory deal, Tripp received $35 million in performance rights for completing a strategic deal.
Tripp agreed to escrow the rights for three years in exchange for $15 million. He will continue to work with the company, exclusively advising on business-to-business opportunities.
Additionally, Davey is stepping down from the company’s board of directors effective today.
Davey is President and CEO of Tekkorp Capital. He leaves the board to devote his time to the new company and other international activities.
“I am delighted to hand over to a very capable Board of Directors who will now lead the company into the next phase of growth,” Davey said.
“As the company’s largest shareholder, I remain an engaged shareholder who believes in the company’s vision and direction and has great confidence in the team in place to execute this strategy.”
Punters’ share price overview
Despite today’s gains, Betmakers’ share price is still in the red year-to-date.
Right now, it’s 5% lower than it was at the start of 2022. It’s also fallen 33% since this time last year.