Sportsbook supplier Newgioco Group is targeting growth in the US sports betting market, with chief executive Michele Ciavarella confident that its ELYS platform will prove to be a disruptive force in the industry.
In a letter explaining the company’s 2019 corporate strategy to shareholders, Ciavarella noted that the ELYS platform had grown rapidly in its core Italian market. After generating handle of $200m in 2017, having launched in August that year, amounts staked through the platform doubled to $400m in 2018.
He said that following the Supreme Court’s decision to strike down the Professional and Amateur Sports Protection Act (PASPA) in May last year, Newgioco had a “golden opportunity” to replicate its Italian success in the US.
“Newgioco has invested opportunistically to capitalize on the US sports betting market and we believe we are now well poised to gain solid returns on this invested capital,” Ciavarella explained.
The supplier’s general and administrative expenses rose 46.6% year-on-year to $3.0m in the first quarter of 2019, due to increased investment to support its US plans. It has already struck a deal to supply the ELYS platform to Montana-based tribal operator the Chippewa Cree Tribe, for its Northern Winz Casino.
He pointed out “remarkable addressable similarities” between Newgioco’s core retail-led Italian operations and the US market, which he said would put the business in an enviable position.
“We are increasingly confident in the viability of our US deployment plan and its two-pronged strategy, the first of which is already underway with traditional licensed tribal and non-tribal casinos and commercial gaming establishments comprised of a broad network of about 1,500 such locations,” Ciavarella continued.
“Our second pathway focuses on approximately 700,000 commercial access points throughout regulated and specific non-regulated states.”
ELYS, he said, had the potential to be a disruptive force in the US market, incorporating market-leading risk management technology, and supported by strong operations and technology teams.
In order to drive investor and shareholder value, he said Newgioco plans to list shares on a US stock exchange, allowing it to attract long-term institutional backing.
To help achieve this, it will appoint a new chief financial officer. Elizabeth MacLean, who was promoted to the role in December 2018, appears to have left the company. Newgioco will also bring in independent, non-executive directors with experience of serving on US-listed company boards.
“These additions to corporate management should enhance our operational and technology teams led by [chief operating officer] Alessandro Marcelli and [chief technology officer] Luca Pasquini, respectively,” Ciavarella said.
“We also believe Newgioco is now better positioned than ever to step on to the next rung of the ladder to success and to drive shareholder value through an upgraded exchange listing and renewed commitment to profitability,” he added.