The Betmakers Technology Group Ltd (ASX: BET) share price exited a trading halt on Thursday with news of a major agreement.
Betmakers will be supplying technology and services to a new wagering venture – operated by a consortium made up of News Corporation (ASX: NWS); Tekkcorp Capital, run by Betmakers' largest shareholder, Matt Davey; and TGW, a trust that counts gambling entrepreneur Matt Tripp among its investors.
As of Thursday's close, the Betmakers share price is 78 cents, 20.93% higher than its previous close.
Let's take a closer look at the news that's got the market excited over the betting technology developer and provider.
Betmakers share price launches on major agreement
The Betmakers share price is rocketing on news the company will be involved with a new betting venture.
The venture – so far dubbed NTD – is planning to run a new online wagering product in Australia and New Zealand. It's expected to be launched in the second half of 2022.
The company has entered into a 10-year exclusive agreement to provide the venture's platform technology and wagering solutions.
The agreement will provide multiple revenue streams over its life and potentially culminate in more than $300 million of revenue.
Getting to the nitty-gritty, Betmakers will receive a $2 million platform establishment fee.
It will also get a launch development fee of $500,000 a month between signing and the 'go live' date. The 'go live' date is expected to be within the next six months.
From then, it will receive at least $7.5 million each year, increasing with CPI annually, for development and services.
Finally, Betmakers will get an annual fee based on a revenue-sharing arrangement.
The agreement will initially represent 25% of the venture's ongoing net gaming revenue. Though, Betmakers' share will drop by 1% each year as the business scales.
The revenue-sharing agreement will also be subject to an initial annual cap of $20 million. That cap will increase 10% each year for eight years and 5% each year thereafter.
Thus, on the final year of the agreement, Betmakers could receive $43 million.
All in all, the revenue sharing agreement represents approximately $313 million of potential revenue over its 10-year life.
Additionally, the agreement in its entirety will bring in a minimum of around $80 million in revenue over its life.
What did management say?
Commenting on the deal that has been powering the Betmakers share price today, CEO Todd Buckingham said:
We are delighted to have entered into this landmark agreement to be the [business-to-business (B2B)] supplier of wagering technology to a consortium with such high calibre investors, including a global media giant and two experts in wagering, Matt Tripp and Matt Davey …
We believe it validates our strategy and supports our view that the end-to-end B2B solution the company provides is an efficient and commercially viable way to successfully launch a wagering platform in today's global wagering markets.
What else did Betmakers announce?
There are two other happenings announced by Betmakers today that could, feasibly, be impacting its share price.
First, the company announced that, under a previous strategic advisory agreement, Tripp has received 35 million performance rights for delivering a strategic deal.
Tripp has agreed to escrow the rights for three years in return for $15 million. He will continue to work with the company, exclusively advising on business-to-business opportunities.
Additionally, Davey is stepping down from the company's board as of today.
Davey is the chair and CEO of Tekkorp Capital. He is leaving the board to devote his time to the new venture and other international pursuits.
"I'm excited to be handing over the reins to a very competent board that will now drive the company into the next phase of growth," said Davey.
"As the largest shareholder in the company, I remain a committed shareholder that believes in the vision and direction of the company and hold great confidence the team is in place to execute on this strategy."
Betmakers share price snapshot
Despite today's gains, the Betmakers share price is still in the year-to-date red.
Right now, it's 5% lower than it was at the start of 2022. It has also slipped 33% since this time last year.
