Jumbo Interactive Ltd (ASX: JIN) has agreed a deal with Lotterywest, what will the share price do?
Jumbo operates www.ozlotteries.com under an agreement with Tabcorp (ASX: TAH). It has a range of lottery games and it also provides lottery software as a service.
Jumbo deal with Lotterywest
Jumo has signed a deal with the WA state government-owned and operated lottery of WA, Lotterywest, to provide a white labelled ‘powered by Jumbo’ online platform and services for up to the next 10 years.
This will allow customers to keep playing online through a platform they are accustomed to, directly with Lotterywest. The software integration is aiming to be completed by 21 December 2020.
Jumbo will receive a service fee for every customer transaction through the platform.
The term is an initial three years, with further possible extensions of three years and four years. The extensions are up to Lotterywest.
Jumbo said customer ownership will be transferred to Lotterywest as soon as a customer opts into the white label platform.
Lotterywest will oversee marketing, whilst Jumbo will be responsible for customer support on behalf of Lotterywest, and can only market to new or existing customers as agreed with Lotterywest.
The final key term was that Lotterywest has the option to transition white label players to the Lotterywest website and app 12 months from the date of customer transfer to the white label platform.
Summary
This has been on investor minds for a while. I think it’s good that Jumbo was able to come to an agreement with Lotterywest.
I don’t know whether the business is worth buying today, it’s still down heavily from the highs in 2019. There are other ASX growth shares that attract me more such as Pushpay Holdings Ltd (ASX: PPH) that seem to have a clearer path to longer term growth.
