With the Justice Department confirming that most online gambling, other than sports betting, is legal, one would expect a gold rush for online gambling companies in the U.S.
The U.S. market has the potential to be one of the largest online gambling markets in the world, and will start from close to zero right now, after crackdowns both recent, and as far back as 2006 that demolished the U.S. online gambling market. The online poker market, just part of what online gambling covers, is estimated to be able to produce as much as $1.5 billion in operating earnings per year, according to Sterne Agee analyst David Bain.
An important fact regarding the opening of the market is that initially only companies with existing gaming licenses in the U.S. will be allowed to compete. This means that the online gaming companies that want to compete will certainly have to strike agreements with existing casinos or get new gaming licenses.
So, given the new reality, which companies will stand to benefit? Some of first to benefit should be the worldwide players that have already established their brands and are able to enter the market right away, as long as they find partners. Most of these companies, however, don’t trade on the U.S. markets – they trade mostly in the U.K. (though the largest player is actually from Austria).
So what are the already established companies?
The largest, is Bwin.party Digital Entertainment (OTC:PYGMF), born out of the merger of two of largest players already, betandwin and partygaming. It should be fast to enter the U.S. market, having already struck agreements with MGM Resorts International (NYSE:MGM) and Boyd Gaming (NYSE:BYD).
Other U.K. companies that haven’t yet announced partners in the U.S. are 888 Holdings (888.L) and Sportingbet (OTCPK:SPBTF).
And in the U.S.?
What is most likely, is that those casinos that don’t partner with existing online gambling companies, will try to develop and field their own web gambling sites. When this happens, they either use internal projects, or turn to the usual suppliers that have the necessary technology – which is the most likely.
There are also online gaming - not gambling - companies that might see this as an opportunity to diversify their sources of revenue. They master all the necessary technologies and their entrance is really just a strategic decision. Still, either these companies apply for a gaming license, or have to partner with an existing licensee.
A huge new market is being opened in the U.S. , and a lot of companies stand to benefit from it. Further research is certainly necessary, but this article already advances a few names in the space that will certainly be positioned to explore this emerging opportunity.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.