ISI Sports
About this raise
ISI Sports, with a valuation of $15.5 million, is raising funds on Mundial Financial Group. The company is bringing racing and sportsbook onto the main casino floor with its ISI Sports Stand Kiosk. ISI Sports brings racing and sportsbook to the customers with its integrated bill acceptor and gives full access to app sports propositions and parimutuel horse racing. The kiosks have tools for easy compliance with currency transaction reports and book wagering reports and are ADA-compliant. Bill Stears and Ernest Matthews founded ISI Sports in March 1999. The current crowdfunding campaign has a minimum target of $24,999.84 and a maximum target of $119,786.40. The campaign proceeds will be used for working capital.
Investment Overview
Not Funded: $0
Deal Terms
Company & Team
Company
- Year Founded
- 1999
- Industry
- Media, Entertainment & Publishing
- Tech Sector
- Distribution Model
- B2B
- Margin
- High
- Capital Intensity
- High
Financials
- Revenue -70.8% YoY
- $750,056
- Monthly Burn
- $23,165
-
Runway
- 19.8 months
- Gross Margin
- 86%
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Synopsis
Sports betting and racing are popular pastimes, but accessing these services within a casino environment can often be cumbersome for patrons. ISI Sports aims to simplify this experience by bringing racing and sportsbook services directly to the main casino floor through its ISI Sports Stand Kiosk.
The ISI Sports Stand Kiosk is a self-service solution designed to integrate seamlessly into high-traffic areas of a casino, such as near bars, gaming pits, slot machines, and the casino cage. The kiosk is equipped with an integrated bill acceptor, allowing customers to easily place bets on sports propositions and parimutuel horse racing without the need to search for a dedicated Race & Sportsbook area. This not only enhances customer convenience but also maximizes betting opportunities for the casino.
In addition to its customer-facing features, the ISI Sports Stand Kiosk is designed with compliance and accessibility in mind. The kiosk includes tools for easy compliance with currency transaction reports and book wagering reports, ensuring that casinos can meet regulatory requirements effortlessly. Furthermore, the kiosks are ADA-compliant, making them accessible to all patrons.
ISI Sports is targeting the growing US sports betting market, which is expected to continue expanding in the coming years. By offering a turnkey solution that eliminates the need for additional employees or expensive remodeling, ISI Sports provides a cost-effective way for casinos to enhance their betting services. The company is currently raising funds on Mundial Financial Group with a valuation of $15.5 million, aiming to secure a minimum of $24,999.84 and a maximum of $119,786.40. The proceeds from this campaign will be used for working capital to support the company's growth and operations.
Price
ISI Sports is currently raising funds on Mundial Financial Group through a common equity offering, with a pre-money valuation of $15.5 million and a price per share of $1.44.
With annual revenue of $750,056 and a revenue multiple of 20.67x, ISI Sports is quite fairly valued compared to similar companies in the equity crowdfunding space. The company’s high margin level and recurring revenue model indicate a potential for substantial profitability once the business scales. However, the annual revenue growth rate of -70.8% suggests that the company has faced significant challenges in the past year, which investors should consider when evaluating the investment opportunity.
To provide a 10X return to investors, ISI Sports would need to achieve a valuation of approximately $155 million (not accounting for dilution). This would likely require extensive market penetration, substantial revenue growth, and effective cost management. Given the addressable market of the 2024 US sports betting industry, there is a considerable opportunity for ISI Sports to scale, especially with its unique value proposition of bringing sports betting directly to high-traffic areas within casinos. However, the highly regulated nature of the casino industry means that ISI will likely take quite a long tim to scale.
Market
ISI Sports is strategically positioned within the burgeoning US sports betting market, which is valued at $15.47 billion and is projected to grow at a compound annual growth rate (CAGR) of 10.4% over the next five years. The market's rapid expansion is driven by the increasing legalization of sports betting across various states and the rising popularity of sports wagering among a broad demographic.
Although the market has established competitors, ISI has been selected as the chosed sports-book providor of more than 200 tribal casinos and 50 comercial casinos, suggesting that there are opportunities for ISI Sports to capture significant market share. However, market competitors like WynnBET are powerhouse casino operations that tend to have self-branded casinos with its own kiosks. Nonetheless, there is certainly an opening in the market for a casino-brand agnostic solution that can be retrofitted into existing casino floors.
Team
ISI Sports is led by co-founders Bill Stearns and Ernest Matthews, both of whom bring 25 years of relevant industry experience to the company. As CEO, President, and Chairman, Bill Stearns plays a pivotal role in steering the company's strategic direction and growth. He has been President of ISI since its foudning in 1999, and has finally gotten the product to market with strong traction.
Ernest Matthews, serving as Vice President and General Counsel, complements Stearns' leadership with his own 25 years of industry experience. Matthews' expertise in legal and regulatory matters (Vanderbilt Law School graduate) ensures that ISI Sports remains compliant with industry standards, particularly in the highly regulated sports betting market.
The company has two other team members, Ken Bradway and Darren Bradway, that serve as Controller and CFO, respectively. Ken has 45 years in finance at companies like Autote (Computerized Bookmaking company) and SGI (sportsbook company). Ken graduated college in 2020 and began working at ISI while still in colege in 2017,
Differentiation
ISI Sports differentiates itself in the sports betting and casino market by offering a self-service kiosk that integrates racing and sportsbook functionalities directly onto the main casino floor. This approach eliminates the need for customers to seek out separate areas for race and sportsbook activities, thereby enhancing convenience and potentially increasing user engagement and betting volume. While there are some companies offering these retrofitted kiosks (like KIOSK), there is no clear leader in the space since most large casinos just have self-branded kiosks on the casino floor.
The ISI Sports Stand Kiosk is designed to be user-friendly and compliant with regulatory requirements. Features such as an integrated bill acceptor, tools for easy compliance with currency transaction reports, and book wagering reports streamline the betting process for both the casino and the customer. Additionally, the kiosks are ADA-compliant, ensuring accessibility for all users. These attributes collectively make the kiosk a comprehensive solution for casinos looking to expand their sports betting offerings without significant remodeling or additional staffing costs.
Performance
Financially, ISI Sports has reported an annual revenue of $750,056. However, this represents a significant decline of -70.8% in revenue growth since the last round, indicating potential challenges in maintaining or expanding its customer base. This led to a net income loss of $-277,874 in 2023 (the company was profitable at $688,093 net income in 2022). Despite dipping back into unprofitability, the company has managed to sustain its operations with a most recent cash on hand of $458,543 and a monthly burn rate of $23,164.50, suggesting prudent financial management in navigating this new pre-profit phase. The company also has very strong margins of 86%, which is very high for a company selling a hardware solution like ISI. The company is currently in over 30 casinos and is slated to enter 200 new US Tribal casinos and 50 commercial casinos. While these are by no means guarenteed, it is a positive sign that they have a strong pipeline of potential casinos to enter.
Risk
Investing in ISI Sports involves several specific risks that potential investors should be aware of. Firstly, the company has shown a significant decline in annual revenue, from $2.57 million in the prior fiscal year to $750k in the most recent fiscal year, representing a drop of approximately 70.8%. This substantial decrease raises concerns about the company's ability to maintain stable and growing revenue streams.
ISI Sports is also characterized by a high level of capital intensity, given its focus on physical hardware (the ISI Sports Stand Kiosk) and its associated production and quality control risks. Manufacturing and maintaining these kiosks requires substantial investment, and any issues in production quality or supply chain disruptions could adversely affect the company's growth and operational efficiency.
The company operates within the highly regulated sports betting and casino industries, which necessitate strict compliance with various market approval and licensing regulations. While ISI Sports has tools for easy compliance, any failure to adhere to these regulations could result in severe penalties, operational delays, or even the suspension of business activities.
Additionally, ISI Sports has a long sales cycle, which means that it takes a considerable amount of time to convert potential customers into actual sales. This extended sales cycle can impact cash flow and prolong the time it takes for the company to achieve profitability. The need for a strategic and persistent sales approach is critical, and any inefficiencies in this process may hinder the company's growth.
Financially, ISI Sports reported a net loss of -$277,874 in the most recent fiscal year, compared to a net income of $688,093 in the prior fiscal year. This shift to a net loss indicates financial instability and underscores the importance of achieving a sustainable and profitable business model.
Lastly, ISI Sports has a high level of debt, with long-term debt amounting to $935,622. The company's ability to service this debt while managing operational expenses and funding growth initiatives is a significant risk factor. Any difficulties in managing debt obligations could negatively affect the company's financial health and operational viability.
Bullish Outlook
ISI Sports is poised to capitalize on the burgeoning U.S. sports betting market, which presents significant growth potential in the coming years. The company's innovative ISI Sports Stand Kiosk brings the race and sportsbook experience directly to the casino floor, integrating seamlessly with existing casino infrastructures. This strategic positioning not only enhances customer engagement but also streamlines operations by eliminating the need for additional employees or expensive remodeling.
One of the standout features of ISI Sports kiosks is their comprehensive compliance tools, which facilitate easy adherence to regulatory requirements for currency transaction reports and book wagering reports. The kiosks are also ADA-compliant, ensuring accessibility for all users, which can be a crucial differentiator in a slightly competitive market landscape with high barriers to entry.
Despite recording a -70.8% decline in annual revenue, ISI Sports continues to operate a high-margin business (86% gross margins) within a regulated industry, underscoring its potential for profitability as the market environment stabilizes. The company is currently in 32 casinos with over 250 casinos in the sales pipleline.
Bearish Outlook
ISI Sports faces several significant challenges that contribute to a bearish outlook for the company. Firstly, the company's annual revenue has declined sharply by -70.8%, which raises concerns about its ability to maintain and grow its customer base. Despite being in a high-margin business, the substantial revenue drop indicates potential issues with market demand or competitive pressures that are not being effectively managed.
The company's high monthly burn rate of $23,164.50, coupled with its current cash on hand of $458,543.00, suggests that ISI Sports may have a limited financial runway. This situation could force the company to seek additional funding sooner than anticipated, potentially leading to unfavorable terms for existing investors. Furthermore, the significant net income loss of -$277,874.00 for the most recent fiscal year underscores ongoing financial struggles and raises concerns about the company’s path to profitability.
Although ISI Sports operates in a slightly competitive market with high barriers to entry, the high capital intensity required to maintain and expand its kiosk operations could further strain its financial resources. The company's reliance on partnerships and compliance with regulatory requirements adds layers of complexity and risk, which may hinder its ability to scale effectively.
Executive Summary
ISI Sports is an early-stage company in the sportsbetting market focused on bringing racing and sportsbook services directly onto the main casino floor through its innovative ISI Sports Stand Kiosk. These self-service kiosks are designed to be placed in high-traffic areas within casinos, such as bars, gaming pits, and near slot machines, providing easy access to sports betting and parimutuel horse racing without the need for additional employees or costly remodeling.
The company’s product offering includes integrated bill acceptors and tools for compliance with currency transaction reports and book wagering reports, all while being ADA-compliant. This turnkey solution aims to enhance the customer experience by eliminating the need for patrons to search for race and sportsbook services within the casino.
ISI Sports operates on a recurring revenue model, supplemented by transactional revenue. Despite a significant decline in annual revenue growth (-70.80%), the company reported $750,056 in annual revenue for 2023. The high-margin business model in a regulated industry suggests potential for profitability, although the company is currently pre-profit with a net income of -$277,874 despite being profitable in 2022.
The company is raising funds through a crowdfunding campaign on Mundial Financial Group, with a minimum target of $24,999.84 and a maximum target of $119,786.40. The proceeds will be used primarily for working capital, which is crucial for sustaining operations and further product development. With a valuation of $15.5 million, ISI Sports is positioned as a high-capital intensity venture with significant barriers to entry, operating in a slightly competitive landscape.
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Company Funding & Growth
Funding history
- Total Prior Capital Raised
- $0
- VC Backed?
- No
Close Date | Platform | Valuation | Total Raised | Security Type | Status | Reg Type |
---|---|---|---|---|---|---|
09/01/2024 | Mundial Financial Group | $15,500,000 | $0 | Equity - Common | Not Funded | RegCF |