Report asks should people invest in online gaming stocks

TAGs: Online Gaming, UIGEA, USA

report-looks-at-usEntering 2011, many in the world at large are getting quite excited about what the year may hold with regards to any regulation that might happen in the US. It’s unlikely to happen at federal level, and some reports seem to think that intrastate gambling is on the rocks in New Jersey but sooner rather than later intrastate regulation is almost inevitable.

Nevada has already approved mobile sports betting in the state, a move that is sure to herald even more regulation in the near future. The talk of regulation is why firms from Europe have been piping up ever since about entering the country were it to happen any time soon.

An article published in this month’s Money Observer takes a look at whether publicly traded companies are worth a risk this year, specifically alluding to companies that might choose the US as their next port of call.

It gives an outline of how the market was before the advent of the UIGEA, and shows that online gambling was worth an estimated $5.4billion (£3.5million) and that analysts have identified that with US regulation it could be worth as much as $16billion.

It doesn’t note whether this figure includes any of the more nimble private companies and it’s unlikely that it does given the fact that the article is written with reference almost entirely to publicly traded companies.

The article goes on to look at the potential value of shares in European-based public companies and how much they may earn in the end. The Barclays Capital note said: “In the event of federal regulation, we believe PartyGaming would be the likely key beneficiary.

“Under this hypothetical scenario, we estimate the potential [underlying profits] uplift could be 94% for PartyGaming and 58% for bwin and 888. On a state-by-state hypothetical scenario, we estimate the uplift for the group would be considerably lower, but still meaningful.”

The full story can be read here, and it will remain to be seen whether those companies see such a payoff in the future.


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