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Why the Jumbo Interactive Ltd share price just stormed to a multi-year high

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One of the biggest movers in morning trade has been the Jumbo Interactive Ltd (ASX: JIN) share price.

At the time of writing the shares of the OzLotteries website operator are up 7.5% to a multi-year high of $2.82.

What happened?

This morning the company announced that its decade-long lottery reseller agreements with Tatts Group Limited (ASX: TTS) has been both extended and expanded.

Furthermore, Tatts has strengthened its relationship with the company by purchasing a 15% stake, with the option to increase this stake to approximately 22.5% over the next 12 months.

This is great news for Jumbo and its shareholders. I’ve been very impressed with Jumbo in the last couple of years, but the one thing stopping me from making an investment was the uncertainty around its agreements with Tatts.

Many of its agreements had expired and could have been cancelled with just 30 days’ notice. But according to the release, all current reseller agreements (NSW, Victoria, South Australia, Northern Territory and Fiji) have now been extended for five years, with the potential to continue beyond 2022.

Should you invest?

I believe this and the fact that Tatts has acquired a significant stake in the company, provides investors with far more certainty moving forward.

As such, I feel it could be worth taking a closer look at Jumbo today even if it has just hit a multi-year high.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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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