eBet surges on QLD hopes

News that gaming systems company eBet (EBT) is starting a trial of its technology in Queensland has sent the stock surging today.

The stock gained 8.1% to $2.40 this afternoon, making it the best performer on the Uncapped 100.

While the trial may not sound particularly exciting to most investors, it can prove to be a very significant revenue driver for eBet.

The company secured approval from the Queensland Office of Liquor and Gaming Regulation to test its CARD IT system at the Prince Alfred Hotel.

CARD IT is touted as the “next generation” ticket-in ticket-out (TITO) product that is backward compatible with older generation pokies machines that still dominate the market with around a 90% share.

TITO solutions allow punters to use a stored value card to gamble and give players the flexibility to transfer credits between machines and collect winnings without the assistance of an attended.

CARD IT is being used in New South Wales and has so far generated $5.9 million in turnover since its introduction 18 months ago.

eBet could make close to that amount over the same time frame for Queensland if state regulators are satisfied with the current trial, which is expected to last three to four weeks.

If that comes to pass, revenue from CARD IT in that state would be material to group revenue given that the company posted total sales of $43.5 million in 2012-13. What’s more, revenue from CARD IT is recurring.

There are further synergies from a successful introduction of CARD IT in Queensland. eBet could steal market share for the general maintenance, monitoring and management of pokies machines from rival Max Gaming.

“Most of the big gaming venues are waiting – they are only on a month-to-month contract with Max Gaming because they are not prepared to go another three years with Max Gaming,” says eBet’s marketing manager, Nicole Thomas. “This is a very positive sign for eBet.”

Max Gaming does not have its own TITO solution and Thomas estimates that it would take the rival anywhere from one to three years to bring a rival CARD IT product to the market. eBet holds 20% of the pokies monitoring and management market in Queensland.

eBet has more than doubled in price since Eureka Report highlighted its strong growth attributes at the end of June.