Friday August 3,2012 : INVESTMENT JOURNAL PUNTS ONLINE GAMBLING
US legalization not so much a matter of "if" but when
Margie Nemcick-Cruz of The Motley Fool investment journal wrote an interesting piece on the future of internet gambling this week, concluding that the US development of poker legalization is a foregone conclusion, and will likely provide a major boost for land gambling giants anxious to get into the market.
"In 2006, sneaky Republicans tacked a clause onto a national security bill, in an effort to pander to their right wing, religious base, that essentially made online poker illegal," the writer notes as background, adding that many top companies bailed out of the US market as a consequence, hitting investors hard.
She fast-forwards to the present and the Pokerstars takeover of Full Tilt Poker, noting that the move is a shrewd one based on confidence in the likely legalization of the US internet poker market either at federal or state levels. There is also an element of winning back the confidence of "snake-bitten" US players, she posits.
"I am here to tell you, unequivocally, it’s not a matter of if this takes place, so much as when," writes Nemcick-Cruz. "As poker is allowed in physical card rooms around the nation and defined by law as "a game of skill," eventually politicians are going to come to their senses, and legalize the online version of it, regulate it, and bolster state and national coffers through taxation of the providers, and the 7% of players who actually win."
She goes on to explain the importance of player liquidity in the online gambling business and its influence on major land companies interested in a piece of the online action, and the ready availability of technology and operator experience by partnering with already well-established internet poker operators keen for US action.
The legalization of online poker would have an immediately positive effect on casino profits and margins, and although the numbers would be small relative to overall revenues, they will almost certainly grow as months passed, Nemcick-Cruz predicts.
"It would give gaming companies a tremendously profitable revenue stream, as the entire casino player database would be employed to recruit customers,” she writes.
"The advantage here would go to casino companies with the greatest number of players passing through its doors- MGM, Caesars, and Boyd Gaming, all of whom have casinos throughout the United States, while Wynn and Las Vegas Sands own fewer properties."
Online poker rooms will be pursuing partnership deals with land-based casinos in order to secure US online licenses, the Motley Fool writer predicts, citing the Bwin-MGM Resorts and 888 poker – Caesars deals as examples.
She believes that a resurrection of the Pokerstars – Wynn deal could be on the horizon, too.
"Despite the fact that I believe casinos will have tough times ahead as the U.S. economy deteriorates, I see the development of [online] poker legalization as a foregone conclusion, and a wind behind the sails of these mammoth ships," the writer concludes.