Wednesday, July 1, 2020

Buying Gan Ltd (GAN) @$26.62

I've been looking at the sports betting market for some time now.
The US Federal court decision to allow states to open up for legal gambling can't be ignored as an investing opportunity. 
There are two major players in the US - DraftKings and FanDuel. DraftKings is a standalone fantasy sports business trading under it's own ticker while FanDuel is part of Flutterr (FLTR.L) entertainment which owns Paddy Power, Betfair and PokerStars. Since I'm more interested in a pure play, this stock is off the table for me. I'm not interested in UK regulations or the Australian betting landscape.
DraftKings (DKNG) sounds more interesting. Here there are a few challenges: First and foremost the valuation is very high. 
Second, The company is n't even a betting app yet.. it's a fantasy sports app, so investors are really banking on the fact that once sports betting opens up in the US, DraftKings will be able to convert it's users from fantasy players to sports gamblers. And although this correlation is very high I'm not sure that it's a forgone conclusion that this transition will go without any problems considering the inevitable big money competition from established deep pocketed, Casinos.
This thinking has brought me to take a look at today's investment - Gan Ltd. - this is a London based company which provides the gaming platform for FanDuel. It also provides  games and Casino platforms.
The company is a small cap ($770M), slightly profitable and with a great runway for future growth.
It's hard to find a lot of news or opinions for this stock, making it a prime candidate for my 'Moon shot' portfolio.
This holding will be about 2% of my portfolio.


  1. what do you think of the risk to the company's core business if the economy continues to shrink? won't the Casino business suffer disproportionately?

  2. Unfortunately for society, but fortunately for investors, tough economic situations don't effect betting very much. The play here isn't so much about the betting sector as a whole, but more about the legalisation of on-line betting in the united states, which is causing pretty much all of the traditional betting institutions (Winn, Cesar's and more) as well as new upstarts (DraftKings) to start implementing online activities. The vast majority of these operators will not develop their own technology but lease it from the likes of Gan. This is why I think the opportunity will remain strong which ever way the economy decides to go.