Could the long-awaited US internet gambling revival finally be on the cards? New Jersey has indicated it will licence the activity, sending shares in a host of online gaming groups soaring upwards (8 Feb). Leading the pack is Bwin.Party Digital Entertainment (BPTY), up 14.7% to 133.8p, followed by 888 (888) up 10% to 127.25p and Sportech (SPO) advancing 6.3% to 80.5p. Gambling software provider Playtech (PTEC) joined the fun, jumping 4.8% to 513p.
New Jersey governor Chris Christie last night said he would be willing to allow a 10-year trial period of online gambling. The measure is seen to be an experiment to save Atlantic City's casinos which have suffered six years of declining revenue. Last year the gambling and leisure resort took $3 billion, compared with $5.2 billion in 2006.
It is not a done deal quite yet. Christie has conditionally vetoed bill 'S2578' which seeks to legalise online gambling within New Jersey state borders. Stockbroker Peel Hunt draws attention to his comment: 'now is the time for the State to move forward, leading the way for the nation, by becoming one of the first states to permit internet gaming'. The broker says this is a clear signal that a compromise bill will have his approval.
The gambling bill is expected to be approved by the Assembly this month and by the Senate in March. The first online bets could be taken as early as September.
Christie wants to raise the tax on winning from 10% to 15% (compared with 8% paid by land-based casinos) and have greater safeguards against gambling addiction. New Jersey previously attempted to introduce legalised online gambling in 2011 but there were concerns about creating an epidemic of illegal back-room internet betting parlours. The latest bill addresses this issue by providing large fines for anyone who runs or advertises such a venture.
Caesars Entertainment (CZR:NASDAQ) is the largest operator in Atlantic City with four casinos. Optimal Payments (OPAY) last year signed a deal to supply payment processing, fraud management and related services to Caesars once the US started to regulate the online poker market.
Bwin.Party has an agreement with MGM (MGM:NYSE) and Boyd Gaming (BYD:NYSE) which, through joint venture Marina District Development, own the Borgata casino in Atlantic City. 888 has deals with Caesars and WMS (WMS:NYSE).