The U.S. online gambling market has been booming. It reached $2.0 billion in revenue in 2020, according to Mordor Intelligence. And with 17.3% compound annual growth expected through 2023, there's more growth ahead. 

Globally, the online gambling market is estimated to be worth $66.7 billion and is projected to grow to $92.9 billion in 2023, according to Statista. This is a big market that's growing quickly, and companies like MGM Resorts (MGM -1.68%), DraftKings (DKNG -0.18%), and Penn National (PENN -8.66%) have captured the attention of investors because of their big moves into online gambling.

But the growth stock I bought more of last week with a connection to online gambling is service provider GAN Limited (GAN 0.70%)

Person betting on sports game on mobile device in a public setting.

Image source: Getty Images.

The company behind the online gambling boom

When companies like Penn National, Wynn Resorts (WYNN -1.87%), FanDuel, Churchill Downs (CHDN -2.00%), and others launch online gambling platforms, they don't do it alone. They often rely on third-party software companies that can provide game content, regulatory reporting, account registration, age verification, location verification, and more. And those are the services GAN provides.

Customers can choose from a variety of tools to plug into their gambling platforms. They then pay GAN a percentage of their gaming revenue as a fee. In other words, as gambling revenue grows, GAN grows too. What's unique is the company has a diverse base of customers and geographies.

The growth engine has begun

GAN Limited is starting to see results from its full-service strategy as more online gambling companies are starting operations across the U.S. 

In the first quarter, GAN's revenue rose an incredible 263% to $27.8 million. Of that amount, $14.3 million was a contribution from the recently acquired Coolbet business-to-consumer product, and $5.8 million was organic growth in the business-to-business segment. That means organic growth was still incredible at 75%.

Management recently said that second-quarter revenue will be $34 million to $35 million, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will be $3 million to $7 million. For the full year, revenue is expected to be between $125 million and $135 million, which is less than five times the company's market cap, which is reasonable given the company's growth rate.

A great growth stock in a great market

GAN Limited may not get any headlines as the online gambling industry grows in the U.S. and abroad, but it will be one of the key infrastructure companies enabling that growth. And with dozens of customers in multiple markets, it has a highly diverse source of revenue.

With an organic revenue growth rate of 75% in a booming market and a price-to-sales ratio of only five, GAN is a growth stock I'm betting on in 2021. The company could be one of the hidden winners in gambling over the next decade.