On a per capita basis, Australia spends more on gambling than anywhere else in the world.

Thirty-nine per cent of Australians (or 6.8 million adults) gamble regularly — at least once a month.

A review by Stockhead of the handful of ASX small caps involved in this space show that the stand out stocks are primarily involved in betting technology rather than casinos.

Casinos have struggled with legal issues and some have seen falling patronage and revenues, while online betting is surging.

According to Roy Morgan, 34.1 per cent of Australian bettors used the internet to place bets in 2018, up from 15.7 per cent in 2012.

The US and UK markets (important for specific small caps) see similar trends. While the US varies from state to state, the highest (New Jersey) has 80 per cent of its bets made online.

 

The (tech) punters

Leading the charge is Betmakers (ASX:BET) which has quadrupled in six months.

The company has a tech platform for sports betting which has been taken onboard by global giants such as GVC, the owner of Neds and Ladbrokes.

Research as a Service analyst Finola Burke has a price target of 21c on the stock as its revenues expand from continued uptake.

Coming second in the race is PointsBet (ASX:PBH) which has more than doubled since its June IPO.

This company is focused on the US market and has seen rapid success with new partnerships and the fast-paced legalisation of sports betting across the country.

 

Casinos haven’t been paying off

The remaining small caps are involved in casinos and they have not had as good a time of it.

Reef Casino Trust (ASX:RCT), which runs the Gold Coast casino, is down 19 per cent in six months while Canberra-based Aquis Entertainment (ASX:AQS) is down 38 per cent in three months.

While Reef made a profit of $755,000 for the half year, Aquis made a loss of $2.5m over the same time period.

Donaco International (ASX:DNA) has arguably had the toughest run of all, but has actually gained modestly in recent months.

It had its Cambodian casino lease terminated over payment issues. The lessor alleged it did not pay but Donaco alleged it made it impossible to pay. The company is currently appealing the decision.

Code Name Price (I) 6 Month % Return 3 Month % Return 1 Month % Return Market Cap
AQS AQUIS ENTERTAINMENT LTD 0.025 -7 -38 0 $4.6M
BET BETMAKERS TECHNOLOGY GROUP LTD 0.175 302 154 22 $78.1M
DNA DONACO INTL LTD 0.079 5 8 -10 $65.1M
PBH POINTSBET HOLDINGS LTD 4.29 122 37 3 $632.9M
RCT REEF CASINO TRUST 2.33 -19 -5 2 $114.3M
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