Amaya Gaming’s pickup of Diamond Game is instantly validated, says analyst Kew

Analyst Justin Kew says Diamond Gaming machines will allow state and provincial lotteries to grow their revenues because they encourage longer player sessions while meeting state lottery regulations.

Cantor Fitzgerald analyst Justin Kew says a five-year contract win for Amaya Gaming’s (TSX:AYA) recently acquired subsidiary Diamond Game Enterprises is an instant validation of the pickup that closed just last week.

Yesterday, Amaya announced it had secured a five-year contract with the Maryland Lottery and Gaming Control Agency to provide veterans organizations in the state with instant ticket lottery machines and related services. The contract includes a five-year renewal option, and the deal would be worth as much as $117-million over the full term.

Diamond Game CEO Jim Breslo explained why the company won the contract.

“The award of this contract validates our efforts to provide a true next-generation ticket dispenser designed to keep up with the modernization that is taking place in other areas of the gaming industry. Further, it demonstrates a trend of states permitting non-profit organizations to provide entertaining and profitable games for its members. We’re proud to be part of this effort and especially proud to be supporting Maryland’s veterans,” he said.

Kew says Diamond Game machines will allow state and provincial lotteries to grow their revenues because they encourage longer player sessions while meeting state lottery regulations. He notes he will revisit his estimates on Amaya Gaming after the contract begins to roll out later this year.

In a research update to clients this morning, Kew maintained his BUY rating and $10.00 one-year target price on Amaya Gaming.

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