Is Gambling.com (GAMB) a Mispriced High-Margin Play in the Expanding Online Gambling Sector?

The online gambling industry is undergoing a seismic transformation, driven by regulatory expansion, technological innovation, and shifting consumer behavior. Amid this backdrop, Gambling.com Group (GAMB) has emerged as a compelling case study in undervaluation and high-margin growth. With a 30% year-over-year revenue surge in 2025 and a projected 33% EBITDA margin, the company appears to be capitalizing on structural tailwinds while trading at a valuation that seems disconnected from its fundamentals.

A High-Margin Business Model in a Fast-Growing Sector

Gambling.com's financial performance in Q3 2025 underscores its ability to generate robust margins in a competitive market. The company reported $39 million in revenue, a 21% year-over-year increase, with its Sports Data Services segment growing at an astonishing 300% YoY to $9.2 million. This segment now accounts for 24% of total revenue, reflecting a strategic pivot toward recurring subscription models. Recurring revenue, which includes both Sports Data Services and other subscription-based offerings, now represents 49% of Q3 revenue-a critical indicator of long-term stability in an industry prone to volatility.

Adjusted EBITDA for the quarter rose by 3% to $13 million, translating to a 33% margin, a figure that outpaces peers like Better Collective and Catena Media. This margin resilience is particularly noteworthy given the flat performance of the core Marketing Services segment, which has been hampered by SEO challenges outside the U.S. Despite these headwinds, Gambling.com's ability to maintain high margins suggests a disciplined cost structure and a focus on high-value offerings.

A PEG Ratio Suggesting Deep Undervaluation

Valuation metrics further highlight the disconnect between Gambling.com's fundamentals and its market price. As of January 4, 2026, the company's PEG ratio stood at 0.09, a figure that implies the stock is trading at a significant discount relative to its earnings growth. This low PEG ratio is partly attributable to the market's skepticism about the company's ability to sustain its explosive growth in Sports Data Services. However, the segment's trajectory-projected to contribute 24% of total revenue in Q3 2025-suggests that this skepticism may be misplaced.

Moreover, Gambling.com's balance sheet provides additional support for its valuation thesis. The company entered Q3 with $7.4 million in cash and $70.5 million in undrawn credit capacity, providing flexibility to fund growth initiatives or further repurchase shares. Indeed, the company reduced outstanding shares by nearly 2% during the quarter, a move that signals management's confidence in its intrinsic value.

Industry Tailwinds: Legalization and Market Expansion

The broader online gambling sector is poised for sustained growth, particularly in North America. The U.S. market alone is expected to expand at a 11.6% CAGR through 2029, driven by state-level legalization of sports betting and casino gaming. Gambling.com is uniquely positioned to benefit from this trend, as its Sports Data Services segment caters to operators seeking real-time data and odds in newly regulated markets.

Legalization in states like Missouri and the rise of prediction markets-legal in jurisdictions where traditional sports betting remains restricted-further expand Gambling.com's addressable market. These trends are not merely theoretical: the North American online gambling market was valued at $18.51 billion in 2025 and is projected to reach $32.95 billion by 2030, a 12.2% CAGR. For Gambling.com, this represents a direct path to scaling its high-margin offerings without relying on the volatile SEO-driven traffic that has historically defined its Marketing Services segment.

Risks and Strategic Considerations

While the case for Gambling.com is compelling, investors must acknowledge key risks. The Marketing Services segment's flat performance highlights the company's vulnerability to algorithmic changes and regional SEO challenges. However, management has responded by diversifying traffic sources and expanding its OpticOdds product portfolio, which could mitigate these risks over time.

Additionally, the company's reliance on the U.S. market-where it enjoys stronger SEO performance-means that geographic diversification is a critical long-term goal. That said, the current focus on Sports Data Services, which is less dependent on organic search, provides a buffer against these challenges.

Conclusion: A Deep-Value Play in a Transforming Industry

Gambling.com Group's combination of high-margin growth, a low PEG ratio, and exposure to a rapidly expanding industry makes it a compelling deep-value play. While the company faces near-term challenges in its core Marketing Services segment, its strategic pivot toward recurring revenue and data-driven offerings positions it to capitalize on the structural growth of online gambling. For investors willing to look beyond short-term volatility, GAMB represents an opportunity to invest in a business that is not only surviving but thriving in a transforming sector.