Thursday 23 March 2017
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Online Gambling Investment – Is It a Safe Bet?

There were two resounding acquisitions in the world of online gambling in the last year and a half. Canadian online casino company Amaya (TSE:AYA) has acquired online poker giant Rational Group, along with its poker brands PokerStars and Full Tilt, for over $4 billion. The other major acquisition came more recently – after a bidding war against 888 Holdings, UK based holding GVC (LON:GVC) has acquired digital entertainment, one of the oldest and largest online gambling companies in the world, for a price of about $1.7 billion. The sheer value of these acquisitions show that there is a lot of money in the real money online gaming business.

According to H2 Gambling Capital, the leading source of data for the industry, online gambling is far from having reached its pinnacle. The analyst expects the global online casino and online bingo market to grow by 10% per year until 2018, reaching a total value of $13.5 billion by that time.

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The online gambling industry might be in for a lot of expansion, too, if more of the United States’ markets will be open to it. A decision taken by the US Department of Justice has a few years ago given US states the possibility to decide for themselves whether they wish to legalize and regulate online gambling – and generate a considerable tax income from it – or ban it completely. A handful of states – including New Jersey, home to the famous Atlantic City – have decided to give it a try, and chose to regulate the industry. Despite a lot of anti-online gambling rhetoric from a series of groups, some sponsored by Las Vegas billionaire Sheldon Adelson, other states are also considering the regulation of the industry, considering that even as we speak a series of Americans are playing online casino games – albeit using operators in the “grey zone”.

To see how the liberalization of online gambling would affect the industry, here is an example involving the above mentioned Canadian company. Amaya has applied for an online gambling license in the state of New Jersey this year, with the goal for its PokerStars brand to return to the state’s online gambling market. After a lot of investigation into the matter, the New Jersey Division of Gaming Enforcement has finally granted its operating license at the beginning of October. Amaya’s shares, closing at CAD 22.98 ($16.47) per share at the Toronto Stock Exchange on September 30 have climbed over 35%, to CAD 31.23 ($23.40) in the following week. And one analyst, quoted by the CNBC, believes this is just the beginning – he expects the company’s shares to reach $40 in time.