 EBET LIMITED 2001-07-27 ASX-SIGNAL-G
HOMEX - Sydney
+++++++++++++++++++++++++
NSW MARKET REVENUE POTENTIAL MORE THAN A$112 MILLION FROM INITIAL
SALES
The NSW market potential for EPS is significant. The table below
shows the size of the total market and what the Company believes to
be the "Available Market" by total poker machine numbers. The Company
has estimated the "Available Marke
t" by considering venue size, type,
location and other market intelligence factors. The total estimated
revenue potential from the "Available Market" is also shown.
NSW CARD BASED GAMING SYSTEM SALES & INSTALLATION REVENUE POTENTIAL
Approx Total Market by maching 100,000 poker machines
numbers
Est "Available Market" 75,000 poker machines
Est "Available Market" Revenue
Potential A$112,500,000 - A$150,000,000
RECURRING REVENUE
POTENTIAL MORE THAN A$30 MILLION PER ANNUM FROM NSW
MARKET
In addition to revenue from the initial sale and installation of EPS,
the Company expects that it will enjoy strong recurring revenue, on
relatively low overheads for that recurring revenue. The recurring
revenue is in the form of software licensing fees and support and
maintenance fees.
Combined, these fees average around $410 per poker machine per annum.
That is, that eBet will charge a venue approximately $410 p
er annum
for each poker machine they have connected to EPS.
The table below shows the estimated recurring revenue potential from
the "Available Market" in NSW.
NSW CARD BASED GAMING SYSTEM RECURRING REVENUE POTENTIAL
Total "Available Market" 75,000 poker machines
Est Recurring Revenue Potential
from "Available Market" $30,750,000 per annum
CAPTURING MARKET SHARE
eBet has what it considers a significant first-mover advantage and
believes that it will
start installing systems at least six months
(and possibly 12 months) ahead of its nearest competitors.
The Company believes that this first-mover advantage will enable it
to capture a significant portion of the "Available Market" and to
become the industry benchmark for card-based gaming in NSW.
Given the "no-brainer" status that the Company considers card-based
gaming will have, it estimates that up to 80% of the "Available
Market" will convert to such systems within the
next three years.
Obviously, considering the potential for competition, the Company
does not expect that it will capture 100% of this market, however it
believes that it will secure a significant percentage of these sales
for the reasons stated above.
INTERNATIONAL GROWTH PROSPECTS SIGNIFICANT
eBet considers that its suite of gaming systems products are amongst
the finest in the world. They have been developed to the requirements
and expectations of NSWs leading poker machi
ne operators. The quality
of eBet's product line-up is underlined by the fact that seven
of the top 10 and 26 of the top 40 gaming venues in the State are
eBet customers. NSW is considered as one of the most sophisticated
gaming markets in the world from a technology perspective and new and
emerging markets around the globe took to NSW for innovations. As
such, the Company believes that its experience and success here can
be leveraged to enable it to achieve success in key in
ternational
markets.
Already eBet's systems are installed in hotels, clubs and casinos in
New Zealand, Singapore and Greece. These sales have been achieved
with virtually no international sales effort on the Company's part.
Rather, direct customers and agents have sought out the products due
to their reputation for excellence.
eBet intends to focus its international expansion on emerging markets
such as the rapidly expanding Native American casino market. The
Company's inte
ntion is to enter into joint-ventures in these key
markets by way of distribution, licensing and/or reseller agreements.
This strategy will enable it to keep capital requirements for new
market expansion low and to leverage the existing experience and
infrastructure of its potential partners.
Various negotiations are under way and the company expects some
revenues this financial year with significant revenues to be realized
from key international markets from FY2003 and bey
ond. In the
mid-to-longer term the Company considers that the international
market potential for its products is several times greater than that
of the NSW market.
ONLINE DIVISION (INCLUDING CITY INDEX)
The Online division is involved in the development, operation and
marketing of online gaming and wagering systems and products. Its key
activities include the operation and maintenance of Internet systems
for NZ TAB; distribution of Tattersalls lottery products; technology
l
icensing and support for Penn National Gaming, Inc (and it's
marketing partners like Playboy); and the operation of City Index
Sports betting.
FY2001 ONLINE REVENUE UP MORE THAN 332% OVER PREVIOUS YEAR
As the chart below demonstrates, the Division has experienced strong
revenue growth over the past 12 months recording revenue of
A$2,200,000 (preliminary unaudited) for FY2001, up 332% over the
prior year. The company considers that this trend is now set to
continue and impro
ve significantly thanks primarily to the growth
prospects outlined below.
ENORMOUS UPSIDE FROM EBET USA WHERE COST STRUCTURE IS VIRTUALLY ZERO
The company believes its Online Division chose its partner well when
it teamed with Penn National Gaming, Inc (NASDAQ:PENN).
Penn is a large and successful operator of racetracks, casinos and
telephone betting in the USA and its progressive and expansive
approach has seen it go from strength to strength in recent years.
eBet has li
censed its Internet wagering technology to Penn and has
developed an Internet betting service for it that offers betting on
leading racetracks from across North America. Under an exclusive
10-year licensing deal eBet is paid between 2-3% of all wagering
turnover generated by Penn on the Internet. Penn has also licensed
the use of the name eBetUSA from eBet. In addition to the
turnover-based payments, Penn also pays eBet for all development work
and a base license fee of US$5
0,000 per annum (approx, A$100,000).
Penn, and marketing partners that it is involving in the business,
are responsible for all establishment and operational costs. Revenue
upside for eBet is enormous and its cost-base (and therefore downside
risk) is virtually zero.
The initial service launched several months ago under the name
eBetUSA.com and with very limited advertising and marketing is
already achieving monthly wagering turnover of around US$400,000 per
month (approx A
$800,000).
PLAYBOY UP AND RACING
Penn's objective is to use the eBet system to create a number of
'branded' wagering sites in partnership with leading brand names. The
first of these is Playboy. When third-party sites like
PlayboyRacingUSA.com are established eBet is paid development fees for
customizing the sites and is then paid 3% of all turnover through
those sites. Again, Penn (and its marketing partners) are responsible
for all of the establishment and operating costs
so eBet's cost base
is virtually zero.
The upside from these deals is almost unlimited. Internet race
wagering in the US is legal in 35 States. It is a new concept in the
US and there is little competition.
US race betting turnover is around US$15 billion per annum
(approximately A$30 billion per annum).
eBet expects that Internet race wagering will represent 5-10% of the
total US market within the next 2-3 years. This estimate is based on
the fact that already 3-5% of a
ll race-betting turnover in markets
like Australia and New Zealand, where Internet race wagering has been
operating for several years, is via the Internet. It appears very
possible that Internet race wagering in the US will reach 5-10% of
the total turnover within the next few years, given that other forms
of off-track betting like TAB's and telephone betting are less
prevalent thereby making Internet betting very attractive to race
fans. Additionally, it is worth noting that
the overall US race
market is growing each year and forecast to grow further.
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