Pacific Online officially awarded P4.1-B e-lotto lease

Pacific Online Systems [LOTO 4.35, up 0.5%; 842% avgVol] [link] disclosed that it has received a Notice of Award from the Philippine Charity Sweepstakes Office (PCSO) of a 5-year lease for a “web-based application betting platform” for a total contract price of P4.088 billion. LOTO has been the front-runner for this award since it was announced by the PSCO in late May that LOTO was the only qualified bidder for the 5-year e-lotto lease. This lease will cover LOTO’s “e-lotto” system which had captured over 14% of e-lotto sales during the 6-month trial between LOTO and PCSO. LOTO is owned by Willy Ocier.

MB bottom-line: As I’ve covered before, web-based gaming is one of those sectors that can have some rags-to-riches stories. Not for those playing the games – of course, they will always lose – but for the companies that are able to successfully develop and expand their userbases. Unlike physical casinos or physical lotto terminals, LOTO doesn’t need to build an expensive facility to attract wealthy players from overseas or maintain a sprawling network of little kiosks in hundreds of barangays across the country to grow. LOTO’s growth is derivative of marketing, because the online systems that it has built do not require physical construction to accommodate more players. Can LOTO grow its user base? After a successful trial, they now have five years to figure it out. LOTO’s stock was up almost 0.5% on the news. It’s actually down 10% from the spike that somehow anticipated the PCSO's announcement back in May, and down 14% from its early June peak. However, it’s up 37% from its YTD low of P3.18/share and has a great deal of volume and hype to facilitate trades.

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.