Everi Holdings Inc.
Current Price: $3.19 USD / $4.17 CAD
Most gamblers will not recognize the name Everi. Heck, most of you reading this will be hearing about Everi for the first time. I was not familiar with the company until getting involved in the regulated Canadian casino market just a short time ago. So as you continue to read, you will likely have as much as an eye opening experience as I did when I found out about Everi and did more research into the company.
Everi has two big claims to fame.
One is the fact that their software controls the New York Lottery VLT’s. Two is their TRK redemption kiosks.
Point one is quite self explanatory, but, for those of you who do not know, TRK stands for Ticket Redemption Kiosk. If you have ever been inside of a casino, I am sure you have seen giant ATM machines which accept slot machine vouchers and turn them into cash. This is a product that Everi has developed and mastered over the years. Their Kiosk system allows casinos to offer a premium experience to their guests, cutting out the wait in line at the window and providing instant cash. In recent years, Everi has also developed a instant cash call, or cash advance station which accepts credit and debit cards. Rather than relying on a cashier to carry out the cash call or withdrawal process at the window for a large fee, Everi offers a self serve solution for casinos.
Incredibly, Everi has developed into one of the major players in the industry today dealing more than $20B in transactions lat year and a running annual average of 85M transactions per year through their terminals and kiosks.
As I mentioned in my last Stock Watch article on Amaya Inc, one of the things I like to look for when investing in a company is market share and staying power. I like to invest in companies that are not going to disappear tomorrow. With such a staggering volume of transactions inside casinos in Canada and the United States, too many casinos rely on Everi for this company to go away.
The self serve and kiosk side of the business is a security clause for me when buying shares. The upside I feel in Everi comes with their machines. After mastering the payment side of the business, Everi began developing slot machines. Not only have they created beautiful cabinets, they have created a fantastic set of games as well. Their multiple touch screen panels offer interactive games which feel more like a video game than they do a typical slot machine. Their “Smokin’ Hot Dice” and “Peking Fantasy” are two of my personal favourites. Their MPX cabinet and screens really stand out on the casino floor.
Everi as I mentioned is a systems first company, and what they have done with their “Tournevent” system is brilliant. Already with traction in hundreds of casinos, their “Tournevent of Champions” is a slot league that runs internationally between March and July of 2017. It is a bracket style format promoted within different casinos that see patrons play off in 2 minute intervals in 8 man leagues. The winners advance until there is a winner at each participating casino. All casino winners get flown to Las Vegas for a chance to play for $1M in cash at Everi’s big finale.
The system that Everi runs is so easy to use and so flawless, it is a product that casinos are going to have to introduce inside their locations if their competitors begin to offer it. I was blown away by how much fun slot players have in these tournament settings, and no company offers a more flawless integration than Everi. This year their casino registration numbers continued to climb, and as the event continues to get more and more press, the future becomes brighter and brighter for Everi. Couple this in with the fact that many jurisdictions in the United States are beginning to introduce casino betting, Everi is naturally in line to secure a number of deals. The most recent deal in the works is to do with the $2.5B development plan around Atlanta.
Everi had a very poor year in 2016, which has to do with their low share price today. A lot of big steps were made in that year, none more notable than the hiring of Michael Rumbolz as CEO. Rumbolz has over 35 years experience in the gaming industry and has worked with some big names. I like Rumbolz because of his time with ACME Gaming, which gives him a strong technical systems background when it comes to the machines, something that is showing through already in Everi’s products and vision. His time spent as the Director of Hard Rock Cafe likely gives him a very helpful rolodex in this space. It also explains the strong presence for Everi in HR locations as well as the event style approach to gaming Everi has developed.
It was no less than 2 years ago that the share price of Everi was up north of $9. With it sitting low at $3 right now, it is hard not to see the upside. Everi has such a strong market share with little risk in their self serve business. The biggest state lottery in the US depends on them and their new CEO has 35 years of connections and experience in the space. This stock has been trending up for a couple months now and with a good Q4 report in 2016 coupled by a big Tournevent of Champions this summer, Everi could get to that $4 mark and beyond quite quickly.