The Jumbo Interactive Ltd share price just hit a multi-year high

This morning the Jumbo Interactive Ltd (ASX: JIN) share price continued its strong run and hit a new 52-week high of $2.94.

Today’s gain means the shares of the operator of the OzLotteries website have now gained over 90% since the turn of the year.

Why have its shares gained so much?

The majority of this gain can be attributed to an announcement in May that revealed that its decade-long lottery reseller agreements with Tatts Group Limited (ASX: TTS) were extended for at least five more years.

Many of its previous agreements had been on month-to-month rolling contracts, leaving many investors concerned that they could be cancelled at the drop of a hat.

As almost all of Jumbo’s revenue is derived from the OzLotteries business, this would have been nothing short of a disaster.

This agreement, and the fact that Tatts has acquired a 15% stake in the company, appears to have calmed the market’s nerves, de-risked its shares, and allowed them to be rerated higher.

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Motley Fool contributor Motley Fool Staff 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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