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BlueBet (ASX: BBT): From IPO to U.S expansion

Established in 2015, BlueBet is an Australian owned online bookmaker that provides innovative wagering products to customers of Australian and international racing and sports.


BlueBet commenced trading on the ASX in July 2021 after successfully completing an $80 million IPO with 70.2 million shares on offer at $1.14. Since its listing, it has reached an all-time high of $3.03 and is currently trading at $2.03.


BlueBet is currently a minor player in the Australian sports-betting landscape, possessing an estimated market share of 1.2%, being largely overshadowed by Sportsbet, Ladbrokes, PointsBet and Neds.


However, the company’s FY2021 annual report contains highly promising figures:

  • 32,472 active customers;

  • Turnover of $344.7 million; and

  • Underlying EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) of $7.5 million.


BlueBet’s growth strategy is focused upon expanding its operations to the United States and establishing ‘skin’ arrangements with gaming providers to provide a bookmaking service to their clientele. The strategy is seeking to capitalise upon a U.S Supreme Court ruling in 2018 which struck down the federal ban on single-game wagering.


BlueBet’s expansion into the United States follows a similar strategy to PointsBet (ASX: PBH), which has demonstrated strong growth since listing on the ASX in 2019. At the time of the IPO, PointsBet’s shares were on offer at $2. At the time of writing, PointsBet currently trades at $9.85.


PointsBet’s success is attributed to the company establishing wagering operations in Illinois, Michigan, New Jersey, Indiana, Colorado and Iowa. The key difference between the strategy of BlueBet and PointsBet is that the former has sought to establish ‘skin’ operations with pre-established gaming providers, where they offer their product to customers of that provider. Whereas PointsBet have established their own independent online bookmaking operations in each state that they have targeted.


Five priority states were identified in BlueBet’s expansion strategy – Virginia, Iowa, Colorado, Tennessee and Maryland. BlueBet’s applications for event wagering licences were rejected in Virginia and Arizona. Arizona was not initially targeted in the expansion strategy – it was opportunistic application made by the company. Nonetheless, BlueBet have reached a Sports Wagering Operator Agreement with Q Casino in Iowa which has been approved by the relevant racing and gaming authority. The company’s applications for wagering licences in Colorado, Tennessee and Maryland are still being assessed.


BlueBet’s success is highly contingent upon its ability to expand into the U.S market. Recent volatility in its share price has been due to the rejected licensing applications in Virginia and Arizona. From the outset, the company currently appears undervalued. This valuation will be tested however once a decision has been reached on its three outstanding licensing applications in Colorado, Tennessee and Maryland. If it is able to secure an agreement with at least 2 of these states, the share price of BlueBet is likely to rise significantly.

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