North American Gambling Legalization Will Open New Digital Market Frontiers

Key Takeaways

• Expansion into newly regulated markets and digital-first gambling trends are fueling sustained growth in audience reach, revenues, and partnership opportunities.
  
• Diversification, tech investment, and industry consolidation are boosting profitability, competitive positioning, and resilience against market or regulatory shifts.
  
• Regulatory, technological, and competitive pressures threaten growth, profitability, and stability, while strategic shifts and acquisitions pose integration and long-term earnings risks.

Catalysts

Operates as a performance marketing company for the online gambling industry in North America, the United Kingdom, Ireland, rest of Europe, and internationally.

• The ongoing legalization and liberalization of online gambling and sports betting in North America (e.g. Missouri launch in December and future regulatory changes such as potential prediction markets approval) continues to expand Gambling.com Group's total addressable market, offering sustained long-term revenue growth and new partnership opportunities as more states and jurisdictions open up.
  
• The rapid consumer shift to digital and mobile-first gambling experiences is increasing demand for sophisticated digital marketing, affiliate, and discovery services-core competencies of Gambling.com Group-driving continued top-line growth even as traditional search channels become less dominant.
  
• Diversification into high-margin, recurring-revenue businesses, such as sports data services (which now contribute 25% of revenue and are seeing triple-digit growth), alongside strategic acquisitions like Spotlight.Vegas, is creating new revenue streams, improving gross profit predictability, and supporting stable or rising net margins as the business mix shifts.
  
• Ongoing investment in brand authority, proprietary technology, and omnichannel traffic sources (SEO, apps, social media, email, paid media) strengthens Gambling.com Group's dominance in both traditional and emerging digital discovery platforms, increasing audience monetization potential and mitigating risk from industry shifts such as changes in search algorithms or AI-powered search.
  
• Consolidation in the gambling affiliate and operator industries is raising barriers to entry; Gambling.com Group's scale, regulatory expertise, and robust balance sheet position it to benefit from industry shakeouts and secure a growing share of operator marketing budgets, supporting long-term earnings growth and cash flow resilience.

Gambling.com Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Gambling.com Group's revenue will grow by 16.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 9.7% today to 27.1% in 3 years time.
• Analysts expect earnings to reach $63.3 million (and earnings per share of $1.3) by about September 2028, up from $14.3 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.3x on those 2028 earnings, down from 20.3x today. This future PE is lower than the current PE for the US Media industry at 20.3x.
• Analysts expect the number of shares outstanding to grow by 1.81% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.71%, as per the Simply Wall St company report.

Gambling.com Group Future Earnings Per Share Growth

Risks

• Increasing regulatory scrutiny, higher tax rates, and the threat of government action against offshore operators in various U.S. states may slow or cap Gambling.com Group's long-term growth as further market liberalization faces political and social headwinds; this could impact top-line revenue growth and the company's ability to expand its addressable market.
  
• The ongoing devaluation of SEO and organic search traffic-due to both generative AI shifts in search engines and Google algorithm volatility-risks reducing high-margin traffic generation for the affiliate business and accelerating a mix shift toward lower-margin, costlier paid, app, and social channels; this mix shift is already compressing EBITDA margins and could further weaken long-term earnings power.
  
• Mounting competition from operators themselves (who are increasingly capturing search positions and traffic), along with direct operator marketing spend and larger affiliate networks, raises the risk that Gambling.com Group's negotiating power and share of operator marketing budgets will erode over time, directly impacting both revenue stability and long-term net margins.
  
• Acquisitions like Spotlight.Vegas, while potentially accretive, introduce execution, integration, and profitability risks-especially as the acquired business is currently low-margin/breakeven and reliant on a macro rebound in Las Vegas; failure to scale these non-core ventures profitably could weigh on consolidated margins and overall earnings.
  
• Heightened reliance on recurring subscription revenue (sports data services) exposes the business to long-term technological disruption (e.g., operator in-housing, alternative data sources, or new entertainment/gambling verticals such as blockchain/casino alternatives), any of which could reduce renewal rates and slow growth in this segment, adversely affecting future revenue and net margin trajectories.

Valuation

• The analysts have a consensus price target of $14.143 for Gambling.com Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $17.0, and the most bearish reporting a price target of just $11.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $233.8 million, earnings will come to $63.3 million, and it would be trading on a PE ratio of 10.3x, assuming you use a discount rate of 7.7%.
• Given the current share price of $8.13, the analyst price target of $14.14 is 42.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.