@tomsmithidg Yes I was also wondering about the impact of economic hardship also.

I asked GPTChat if there was any research on the impact of economic hardship on gambling. It referenced this research paper: https://pmc.ncbi.nlm.nih.gov/articles/PMC5524821/?utm_source=chatgpt.com and summed up as follows:

Academic studies looking at past recessions (e.g., around 2008) found that:

• Participation in some forms of gambling can increase during economic hardship — especially lotteries and low-stake games — possibly because people experiencing financial stress are drawn to the small cost and chance of a big win. Individuals reporting financial difficulty were significantly more likely to buy lottery or scratch tickets during the recession compared to those not financially affected.  
• Casino gambling expenditures tend to stagnate or shrink during recessions because casinos are relatively expensive and discretionary; casino revenue growth slows or declines during downturns.  

Summary from long-term data:

• Lottery consumption often proves recession-resistant — it doesn’t drop much and may even rise.
• Casino gambling is more pro-cyclical — it grows when the economy grows and stagnates or shrinks when incomes fall.
• Other forms like pari-mutuel wagering may decline in tough times.  

Economic Hardship Can Be Linked to Gambling Upticks

Some studies show that people who experience financial difficulties during downturns are more likely to engage in gambling behaviors, even when overall gambling participation doesn’t change much. For example:

• A population-based study found those affected financially by a crisis were more likely to increase lottery play — with low stake and high jackpot games seen as potential ways to improve finances despite risk.  

Re 1H2026, I thought the first 4 months looked positive. I’m wondering where you read “11.38% down at 31 December half year”. I haven’t noticed any trading updates this year. The last update announcement I could find was on 11 November 2025 which was looking positive for the first 4 months of 1H26:

• Lottery Retailing TTV up 5.2% to $142.4 million
• revenue up 12.5% to $35.3 million
• SaaS TTV up 9.0% to $87.5 million, revenue up 8.1% to $3.4 million
• 
Managed Services TTV up 13.1% in the UK, 10.8% in Canada
• Dividend payout ratio revised to 30%-50% of statutory Group NPAT
• FY26 underlying EBITDA contribution from DCG UK: £7.0-£7.3 million, DG USA: US$2.7-3.0 million

• One-off transaction costs of ~A$3 million for acquisitions

I note here that the dividend payment policy has changed with Jumbo intending to retain and reinvest 50% to 70% of its earnings. If Jumbo can continue ROE above 30% this will significantly increase its valuation. Using McNiven’s valuation formula and assuming 50% of earnings is reinvested the valuation lifts from $10.00 to $12.50 per share (requiring a 12% annual return).

Hey @Rick thanks for your posts on JIN. In relation to your vulnerabilities, my thoughts on potential risks are on the follows:

• The speed of repayment of the $120m debt facility to fund the two acquisitions this year
• Unknown things under the hood of the two new businesses (similar to what happened with other recent acquisitions)
• Giveaway market does not achieve anywhere near the expected growth targets
• Continued price increases (on top of TLC price increases) push users to the use the competition platform
• TLC not winning the Victorian lotteries renewal in 2028
• Regulations impact the overall margins of the giveaways that can be achieved
• Unfavourable timings of the jackpot cycle (this is only a short term price impact)
• Interest rate increases/recession (low risk right now)
• Continued relationship between JIN and TLC post 2030 with the new CEO coming on board

While they might not all be likely or significantly impact the business, they are still in my mind when considering the valuation. I have put the more likely/higher ones near the top of the list

I've also run it through the McNiven and still get the same $10-14ish range depending on how aggressive a return (10-12%) I am seeking.

@tomsmithidg - On top of the stats provided by Rick above, there's a good image in the Presentation to Macquarie Australia Conference 2024 which shows the impacts of previous recessions on the Australian lotteries market. I can appreciate that JIN are in UK and Canada, which might have some different impacts should we another global recession occur in the future. The unknown for me right now is how the giveaway market will react in a downturn.

@SudMav i really appreciate your view on the potential risks. I’m new to the business and I’m still researching what can impact future earnings. So far I like what I see, but I’ll be looking more closely into your list of potential risks. Nice to see you get a similar valuation using McNiven’s. What percentage reinvested earnings are you using? It makes a huge difference compared to the previous dividend policy. This along with the on-market share by-back are excellent use of capital in my view.

G'day @Rick , sorry mate, looks like I misread a Morningstar Report, that was for 31 December 2024 not 2025. (#oldeyes)

Thanks @SudMav , I do love a graph. @Rick , that dividend change could hurt share price in the short term too if holders for earnings (like me) divest themselves due to the reduced cash returns.

That’s true @tomsmithidg. A lot of investors don’t realise that high ROE businesses create much greater value for investors by reinvesting a significant portion of their earnings back into future growth. Of course this is only beneficial if the reinvested capital continues to generate very high returns on shareholders equity. Shareholder equity and earnings will grow at a much higher rate and the share price should follow suit. The cash returns will be there, but it takes time for the compounding of shareholder equity and earnings to take place. The dividends should also grow proportionally.

Hey @Rick welcome to the party. There's some really good content in the Reports for the company, and i have also got a lot from conversation with @Karmast over the past year.

My inputs in the McNiven were a 10-12% return from a ROE of 22% (which is based on an NPAT of 50m), div payout ratio of 40% of an estimated 40c annual dividend and an estimated equity of $230m. I am waiting for the official financials to come out before I tidy up my valuation range.

@tomsmithidg - i would much rather the smaller dividend and they pay down the debt to improve their financial position, than keep the dividend the same and pay more money to ANZ in interest.

JIN interestingly re-commenced their buyback late last year before the pause period, which means that the leadership team do see some value at the current price.

The reduced dividends should only be temporary (3 to 4 years is my guess), as they pay down the debt they took on for the two new businesses they acquired late last year. Mike doesn't like debt but did like both those businesses a lot. So, their stated intention at the AGM was to pay down the debt promptly by reducing the payout ratio for a while. A wise and appropriate strategy in my view. It's reduced the concentration risk of the TLC contract a bit more and should see double digit earnings growth returning for at least the next few years.

Thanks @SudMav not all buybacks are in shareholders best interests. This one is, and I don’t mind some debt providing ROE stays above 30% and their acquisitions have a high return on invested capital. ROE dilution is a risk with new acquisitions.