Thanks for reading and commenting! Would indeed be good to see the negative sentiment shifting. With my 5+ year horizon, I do believe the margin of safety is significant, not too worried about the short term swings. Portfolio management of course important, don't bet the house.
Really like how you frame this around tax receipts and legislative physics instead of just “moat + TAM.” The October numbers make it hard to argue with the core: when the Big Three are all printing record iGaming revenue at once, EVO is basically riding a regulated revenue utility that governments are now fiscally addicted to.
Where my brain goes from here is the through-cycle question: if North America really is the fortress pillar, how much of that 20–30% growth and widening moat is already embedded in the multiple? The structural story you lay out is rock solid – high barriers, entrenched studios, regulators quietly choosing tax flows over moral panic – but at some point the stock stops being “mispriced growth” and starts being a toll road everyone knows about.
Either way, this is a great reminder that the real risk isn’t demand, it’s the pace and terms of new state openings. The sweepstakes crackdown + record tax months feel like a powerful one-two combo for EVO’s long game.
"Regulated revenue utility" is spot on, I might have to steal that :)
My take is that at current levels, the market is pricing Evolution almost entirely on the "Asian Risk" (expecting a decline), rather than on the "US Fortress" (expecting 20+% compounding).
If the market truly viewed the North American segment as a utility-like asset ("toll road"), I believe we’d see a higher multiple floor, similar to other high-quality compounders. The gap between today's grey market valuation and that future 'utility' valuation is a large part of the opportunity.
You are spot on about the pace of regulation being a real risk. It is a slow grind, but assume fiscal realities will win in the end.
Currently only 15% of Evolution's revenue comes from North America. But if this trend in iGaming revenue in the US continues (and that chart shows no signs of the growth rate slowing down), it could grow to maybe 25-30% of revenues by 2030 and growth in this market could become the growth engine of Evolution's total revenue. Especially when comparable figures no longer reflect the negative FX movement of this past year.
I completely agree. That 15% to 30% shift is one of the most important transitions in the investment case. When North America becomes the primary growth driver, the narrative risk around Evolution changes. It stops being an 'Asian recovery' story and starts being a 'US secular growth' story. That should command a higher multiple.
The currency noise has definitely hidden the true speed of this shift, but the underlying state-by-state data proves it is happening.
One of the few stocks I own. Seems like a home run. Great article. What’s your take on Asia long term? I don’t have a great grasp on the future there. Seems like it’ll return to growth
The October numbers from Pennsylvania, New Jersey, and Michigan are impresive. All three states hitting records simultaneously really backs up the secular growth story. The fact that Evolution can scale their studio capacity to meet this demand without major capex bottlenecks is underrated. Their regulated market moat gets stronger as more states come online and the compounding efect becomes clearer.
Great points, thanks for commenting. The cannibalization fear is definitely the primary weapon for the anti-iGaming lobby right now.
However, the reality is nuanced. The biggest land-based operators are actually Evolution's key partners. They are using Evo to power their own digital transition. The 'lobby' is split into he big players who want iGaming because it expands their TAM, while smaller regional casinos fear it.
On RNG: You're right that it's lower margin than Live, but for Evolution, it is also a customer acquisition tool. Beyond the growth and margin still captured, they use top-tier slots (NetEnt/Red Tiger) to funnel players into the high-margin Live games. Important to own the full value chain.
I recently exited Evolution. But I will follow-up. Once the company sees growth again, I might re-enter. So the company has something to prove.
Thanks for reading and commenting! Would indeed be good to see the negative sentiment shifting. With my 5+ year horizon, I do believe the margin of safety is significant, not too worried about the short term swings. Portfolio management of course important, don't bet the house.
Really like how you frame this around tax receipts and legislative physics instead of just “moat + TAM.” The October numbers make it hard to argue with the core: when the Big Three are all printing record iGaming revenue at once, EVO is basically riding a regulated revenue utility that governments are now fiscally addicted to.
Where my brain goes from here is the through-cycle question: if North America really is the fortress pillar, how much of that 20–30% growth and widening moat is already embedded in the multiple? The structural story you lay out is rock solid – high barriers, entrenched studios, regulators quietly choosing tax flows over moral panic – but at some point the stock stops being “mispriced growth” and starts being a toll road everyone knows about.
Either way, this is a great reminder that the real risk isn’t demand, it’s the pace and terms of new state openings. The sweepstakes crackdown + record tax months feel like a powerful one-two combo for EVO’s long game.
"Regulated revenue utility" is spot on, I might have to steal that :)
My take is that at current levels, the market is pricing Evolution almost entirely on the "Asian Risk" (expecting a decline), rather than on the "US Fortress" (expecting 20+% compounding).
If the market truly viewed the North American segment as a utility-like asset ("toll road"), I believe we’d see a higher multiple floor, similar to other high-quality compounders. The gap between today's grey market valuation and that future 'utility' valuation is a large part of the opportunity.
You are spot on about the pace of regulation being a real risk. It is a slow grind, but assume fiscal realities will win in the end.
Currently only 15% of Evolution's revenue comes from North America. But if this trend in iGaming revenue in the US continues (and that chart shows no signs of the growth rate slowing down), it could grow to maybe 25-30% of revenues by 2030 and growth in this market could become the growth engine of Evolution's total revenue. Especially when comparable figures no longer reflect the negative FX movement of this past year.
I completely agree. That 15% to 30% shift is one of the most important transitions in the investment case. When North America becomes the primary growth driver, the narrative risk around Evolution changes. It stops being an 'Asian recovery' story and starts being a 'US secular growth' story. That should command a higher multiple.
The currency noise has definitely hidden the true speed of this shift, but the underlying state-by-state data proves it is happening.
One of the few stocks I own. Seems like a home run. Great article. What’s your take on Asia long term? I don’t have a great grasp on the future there. Seems like it’ll return to growth
The October numbers from Pennsylvania, New Jersey, and Michigan are impresive. All three states hitting records simultaneously really backs up the secular growth story. The fact that Evolution can scale their studio capacity to meet this demand without major capex bottlenecks is underrated. Their regulated market moat gets stronger as more states come online and the compounding efect becomes clearer.
US iGaming doing great does not automatically means Evolution is too:
- As you noted the main drive is RNG segment which is highly competitive and low margin comparing to live gaming
- Local brick and mortar going online too, and they have a lobby to mend the legislation to their benefit
Great points, thanks for commenting. The cannibalization fear is definitely the primary weapon for the anti-iGaming lobby right now.
However, the reality is nuanced. The biggest land-based operators are actually Evolution's key partners. They are using Evo to power their own digital transition. The 'lobby' is split into he big players who want iGaming because it expands their TAM, while smaller regional casinos fear it.
On RNG: You're right that it's lower margin than Live, but for Evolution, it is also a customer acquisition tool. Beyond the growth and margin still captured, they use top-tier slots (NetEnt/Red Tiger) to funnel players into the high-margin Live games. Important to own the full value chain.
Great work Fjord!
Thank you Mr. Invader :)