2 Gaming & Esports Stocks To Buy As Canada Debates On Betting Policy

3 min read | May 27, 2021 10:56 PM AEST | By Team Kalkine Media

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2 Gaming & Esports Stocks To Buy As Canada Debates On Betting Policy — Image source: Africa Studio, Shutterstock

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The Canadian online gaming space boomed amid the COVID-19 pandemic as users looked for alternatives to engage themselves amid stay-at-home rules.

As news of a vaccine rollout threatened the digital gaming space, investors started diverting their attention to other opportunities in the gaming and esports arena. Recent developments around legislations on online betting are likely to improve investor interest in these stocks again.

Canada Senate has been hotly debating the legalization of single-event online sports betting bill – C-218. The bill was cleared in the Senate’s second reading on Tuesday and is now headed the Standing Committee on Banking, Trade and Commerce’s table.

Investors interested in Canadian esports stocks are likely to benefit if the bill is passed. This amendment in the Criminal Code of Canada will also open wider revenue stream for gaming companies.

Let’s now analyze two gaming stocks which may benefit from this policy development:

Source: Pixabay

Score Media and Gaming Inc (TSX:SCR)

The gaming stock’s growth has been remarkable in the last one year. It grew about 258 per cent in a year, as it touched C$ 20.4 on Wednesday, May 26.

The stock, which listed on NASDAQ in Feburary in 2021, rose sharply and registered a 21.4 per cent rise in the last one week.

If the single-event sports betting bill is approved by the Senate, the company is likely to benefit from it.

The adoption of the bill would open a vast revenue stream for online gaming players, reports suggest. The company claims the potential annual gross revenue for online gaming market in Canada can hit US$3.8 billion to US$5.4 billion.

In its earnings for the quarter ended March 2021, Score Media reported C$ 5.6 million revenue from operations, registering a 17 per cent year-on-year (YoY) rise in its media revenues. Its revenues from betting app ScoreBet rose 491 per cent YoY.

Enthusiast Gaming Holdings Inc (TSX:EGLX)

Toronto-based Enthusiast Gaming’s stock has grown about 383 per cent in the last one year, touching C$ 7.63 on the Toronto Stock Exchange, on Wednesday, May 26.

With a market capitalization of C$ 886 million, the stock has returned about 68.4 per cent year-to-date.

Its net revenue in the first quarter of fiscal 2021 rose about 321 per cent YoY, touching C$ 30 million. Its gross profit during the quarter was at C$ 5.9 million, up 80 per cent higher YoY.

This rise in gross profit was on the back of the company’s focused acquisition strategy and gains from its organic direct sales growth, as well as a rise in its premium subscriptions.

Its net loss, however, widened YoY to touch about C$ 13.5 million.

Please note: The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.

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