Lotto24 extended its market leadership in 2016, with market share up from 26% to 31%. This demonstrates its core USPs: first mover advantage in the German online lottery market, management experience and marketing know-how. Despite a weak Q3, top-line growth remains strong (FY17 guidance of 10-15% billings growth). After heavy investment in technology and marketing, the business should reach FY17 EBIT break-even, with future profitability flexed according to jackpot opportunities. The stock has performed well but, in our view, there is plenty of upside, as online lottery continues to take a bigger slice of the overall German lottery market.

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