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Why the Topbetta Holdings Ltd share price surged 13% higher today

The Topbetta Holdings Ltd (ASX: TBH) share price has had a strong start to the week.

In morning trade the online bookmaker’s shares are up almost 13% to a five-month high of 44 cents. This brings TopBetta’s 12-month return to an impressive 76%.

Why are its shares higher today?

This morning TopBetta released its latest quarterly update which revealed a strong rise in revenue and active customers.

According to the release, the company recorded quarterly wagering and tournament revenue of $82.9 million in the December quarter. This was a 52% increase on the September quarter and well ahead of its guidance of $75 million.

The catalysts for this impressive performance were the strong growth of its Channel Islands-based The Global Tote business and a solid rise in customers for its topbetta.com.au during Victorian Racing’s Spring Carnival.

TopBetta saw active unique clients increase by 30% on the previous quarter to 14,223. Pleasingly, management believe that this increase has positioned it well for a strong 2018.

Which will be boosted by the expansion into the United States of The Global Tote business. Through an agreement with WatchandWager.com, North American punters will be able to bet on Australian thoroughbred, harness, and greyhound fixtures.

Should you invest?

I have been very impressed with TopBetta’s performance over the last 12 months and can’t say I’m surprised to see its shares climbing higher again today.

However, no further financial details were given for the quarter. So I would suggest investors hold off an investment until its half-year details are released next month.

At that point we will know whether the company is profitable and generating free cash flows, or whether it had to spend big on marketing in order to generate these revenues.

Until then, investors may want to consider gaining exposure to the gambling industry through investments in Crown Resorts Ltd (ASX: CWN), Star Entertainment Group Ltd (ASX: SGR), or even pokie machine maker Aristocrat Leisure Limited (ASX: ALL).

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