Why the TopBetta Holdings Ltd share price jumped 42%

TopBetta Holdings Ltd (ASX: TBH) saw its share price soar 42% to 27 cents yesterday, with nearly 12 million shares changing hands.

For a company with a market cap of just $26 million – that’s a lot.

TopBetta is an online betting company with its primary asset being a wholesale tote product (The Global Tote) which enables licenced wagering operators, including corporate bookmakers and tote operations around the world to participate in a global pool. International thoroughbred racing will be the first pooled products launched, and will be followed by sports and other racing fixtures.

TopBetta also aims to introduce social gaming into sports betting including things like ‘fantasy sports’.

Yesterday TopBetta announced that Ladbrokes, the leading British bookmaker with more than 2 billion in annual revenue had signed on as the first wagering operator to back The Global Tote. The company also announced that it had received approval from Racing NSW for NSW thoroughbred horse racing.

TopBetta share price

Source: Yahoo Finance

Clearly, investors are excited about the disruptive element of The Global Tote as well as the potential for punters anywhere in the world to gamble on events anywhere. The social media aspect also appears highly promising given the success of the likes of Facebook and Twitter.

TopBetta is growing clients at a fast clip, with more than 7,500 active clients for the three months ending October 31. That’s almost 50% more than at the end of September – although off a low base.

Foolish takeaway

TopBetta is not yet profitable, so investing today is still a high-risk play that may or may not work out. There’s always the potential for larger players to throw many millions of dollars at creating a competing product too.

A better bet than TopBetta?

This company’s dividend is almost the stuff of legends. Its reliable cash flows support a high payout ratio, and the company’s stash of franking credits are the cherry on the top of the dividend cake. Based on the last 12-months of dividends, shares are offering a fully-franked 6.5% yield, which grosses up to a whopping 9.3%, when those franking credits are included.

Discover out the name of this blue chip share along with 2 others in our new FREE report "The Motley Fool’s Top 3 Blue Chips Stocks For 2017."

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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