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The Australian Securities Exchange or ASX is an investment platform that acts as a market operator that lists companies and facilitates payments. Companies that develop betting software have emerged on the ASX and naturally, it has piqued interest as to their market potential, whether they have a competitive advantage, and whether it could be a profitable investment for interested parties.
Understanding the Australian Securities Exchange
One of the more commonly known stock indexes are Nasdaq, the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), and the London Stock Exchange (LSE). Not to be overlooked, the ASX is also consistently ranked on global indexes.
Each of these indexes operate on their own regulations, stipulating that listings have to meet specific requirements. According to the ASX Listing Guide, it is mandatory that "a satisfactory spread of shareholders to be achieved, being a minimum of 300 non-affiliated security holders who each hold shares with a value (based on the issue price) of at least $2,000."
Recent trends boosting the betting industry
The betting industry has always existed, even as early as the 1990s, but its growth online was perpetuated by the pandemic whereby numbers balloons to new heights. A study led by University of Bristol and published in 2021, revealed that regular gamblers were prone to six times more gambling during the lockdown than prior to the pandemic.
This could be attributed to the sudden change in life routine and for lack of anything better to do, they choose to reach for the ever-accessible smartphone and place bets online. Those that occasionally placed bets were also twice as likely to gamble online, whereas children may also fall prey to esports marketing campaigns that encourage gambling.
During the pandemic, there was also a surge of interest in esports as traditional sporting events were put on hold. The reinvigoration of the e-sporting industry also enhanced the betting community, and now that the social restrictions have been lifted and live sporting events are back in the fold, the betting industry is doing even better than ever before.
According to the Grand View Research, the compound annual growth rate (CAGR) of the global betting industry is placed at 10.1% between 2021 to 2028, wherein the betting market is predicted to hit $158.2 billion by 2028.
The betting software sector's performance in recent years
With the modern betting industry on a growing trajectory, betting software companies are becoming increasingly crucial in order to support platforms with the technology needed to run their bets seamlessly.
A prominent player in the field is BetMakers Technology Group (ASX: BET), having been serving the betting industry since 2013 and acquiring Sportech, a global racing and sports betting entity back in 2021, a move that expanded its product portfolio and clientele.
They offer both retail and online experiences and have strongly established themselves as a leading provider, not just in Australia, but on a global scale and with a reputable name in the international markets by partnering with major operators such as Tabcorp and Entain.
In 2023, the company reported revenue of AUS 64.4 million, which is up an impressive 85% from the previous year. For FY2023, BetMakerers achieved an EBITDA (earnings before interest, tax, depreciation, and amortisation) of AUD 12.3 million, a vast improvement over FY2022, in which the company had an EBITDA loss of AUD 5.7 million. Their growth was boosted through their expansion of product offerings and the increased adoption of its platforms by betting operators.
It has been made relatively clear that BetMakers is a winning horse in the stock market, with a large capacity for continued growth. They have shown tremendous ability to adapt and change which is a promising attribute to have in a company.
Rising competition to rival BetMakers
While BetMakers has been established as a key player in the industry, leeways should be made for new entrants. For example, BetCloud, one of the newest platforms to rival BetMakers, has seen significant and exponential growth, launching over a dozen sites last year.
The other three main betting software providers in Australia are Generation Web, MyTrackPrice, and PuntersTech. Though neither of these providers are currently listed on the ASX, they should not be discounted as given the trajectory of the industry, more and more companies will join the foray sooner rather than later. Competition is always good as it will continuously elevate the industry and propel it forward with new innovation.
However, as with any new products in the market, investors should be wary of regulatory changes and market volatility. Those that aren't keen on taking a risk should sit back and wait for the dust to settle and watch how regulatory bodies will react to the domination of the gambling sector, but it is clear that those with a penchant for risk will undoubtedly earn more if there are no hurdles in the road ahead.
Ultimately, potential investors interested in the betting software sector should consider their own risk tolerance and investment objectives before delving into the specific characteristics of each company and deciding whether they are sold on their ideology and strategies.
At present, it does seem like BetMakers are making good headway in the space of ASX and is the strongest contender as a beneficial investment opportunity, but keeping a keen eye out for up-and-coming technologies and companies that challenge its approach to the betting industry is a smart move if one ever does decide on joining the foray and investing in betting platforms on the ASX.
Gamble responsibly. Contact the Gambling Helpline for free and confidential support, information and counselling on 1800 858 858 or visit www.gamblinghelponline.org.au.