The EML Payments Ltd (ASX: EML) share price has started the week strongly following the release of a positive announcement.
At the time of writing the payments company's shares are up 8% to $1.88.
What was announced?
This morning the company announced that its U.S. business has entered into a multi-year agreement with bet365 for the provision of a bet365 branded reloadable card program in the state of New Jersey in the United States of America.
Under the agreement EML will give bet365 customers an easy to use reloadable card to both remit and withdraw funds from their gaming account. The initial program in New Jersey is expected to launch in mid 2019 following regulatory approvals.
Furthermore, the agreement includes the opportunity to expand the relationship if bet365 commences operations in other states.
For now, management is unable to accurately estimate future Gross Debit Volume (GDV) from the agreement as sports betting has only recently been legalised in this market. However, it expects that the GDV to revenue conversion rate will be in line with its average for the segment, with the first material earnings contributions expected to be delivered in the second half of FY 2020.
Should you invest?
As bet365 is the world's largest online sports betting company with revenues over US$3 billion, getting on board with it in the massive U.S. market is certainly a big positive in my opinion.
But it may be some time before this agreement generates significant revenue for the company. In light of this, I wouldn't act on this news just yet and would suggest investors wait to see how things develop over the next 12 months.
For now, I see more value in the shares of fellow payments companies Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) .
