Gambling Stocks Rise on DoJ AnnouncementBy: Joe Valentino, Thursday December 29th 2011
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The best way to judge the impact of an event on the online gambling industry is to see how the stocks of the listed companies associated with the industry respond to the event. In response to the US Department of Justice (DoJ) announcements a few days back, the share prices of major gambling operators have moved upwards significantly. The twin announcement stated that the Wire Act applied only to online sports betting and that US states could legalize and regulate online gambling.
The upward movement was seen in the stocks of both land casino operators as well as online gambling operators. Also it was seen in American stocks as well as European stocks. This is because of the partnerships forged between the different groups in preparation for the opening up of the American online gambling market.
Scientific Games Corp went up a huge 15.4%. Playtech Ltd, which is affiliated to Scientific Games through SciPlay, went up a corresponding 14.9%. MGM Resorts International was up 4.6%, but bwin.party, which has a tie-up with it, was up 22.8%. 888 Holdings, having a deal with Caesars Entertainment, was up 9.0%. William Hill went up 3.2%. William Hill had acquired Brandywine Bookmaking, a land-based sports betting operator in Nevada and Delaware and some other similar businesses. Other gambling operators whose share prices rose in the markets include Wynn Resorts, International Game Technology, Bally Technologies and Ladbrokes.
Todd Ellers, an analyst at Roth Capital Research, commented on this situation. He opined that companies associated with lotteries in the various states would benefit the most. These include vendors like Scientific Games, Gtech and Intralot. The second lot to benefit would be casino operators with strong brands which could operate online casinos if authorized by enough states. Finally gaming suppliers like IGT, Bally Technologies, WMS Industries, Aristocrat and Konami would benefit from providing software and game content for online casinos.
Several US states have reaffirmed their intent to go for some online gambling products. Nevada has the entire legal infrastructure in place to start online poker. California has announced that it would defer online poker and start with online lottery. Massachusetts will constitute a dedicated online gambling task force to evaluate the various options. Illinois Lottery will be selling tickets over the Internet by the end of March 2012. Illinois Senate President John Cullerton said, "The idea is to have the lottery function like a modern business using modern technology. In that regard, it's great to have the federal government's OK on this, and we now look forward to seeing some results." Utah struck the discordant note with Republican Representative Stephen Sandstrom condemning all forms of online gambling. He called the DoJ announcement a desperate Federal attempt at fixing an ailing economy directly attributed to President Obama's failed fiscal policies. Sandstrom will submit a bill that will make all online gambling in Utah illegal.
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