Private Equity Firms Investing in Lotteries and Casinos

Published Saturday, April 03, 2010 -

It wasn't many years ago that anyone of age that wanted to gamble in the USA had to travel to Las Vegas, Nevada or Atlantic City, New Jersey to put there money into a slot or play the green tables. The American Gaming Association states that there are now in 12 states 445 full service casinos and 423 operating casinos on Native land. This is plenty enough evidence for cash strapped states that the gambling market is growing with an additional 11,500 card rooms and e gaming establishments. Research by the Rockefeller Institute of Government has shown that as many as twenty five US states are looking to expand or add gambling operations, including online gambling. H2 Gambling Capital research from the U.K. revealed the total gross revenue for the gambling industry was $335-billion USD in 2009. Not only are governments wading into gambling in general with more lotteries and casinos and of course online access to casinos and poker rooms, but private equity firms are looking at online gambling and casinos as a good investment strategy knowing that there are solid returns from gambling. It is interesting that the Canadian provincial governments are setting in motion a claim for some of the gambling industries profits. the Ontario Teachers' Pension Plan one of the largest pension funds in Canada has made it's investment moves into gaming. It recently failed in a bid to win the licence for Australia's New South Wales lottery, but managed a coupe over a Luxembourg based buyout firm CVC Capital Partners to acquire Camelot Group PLC, operator of the U.K. National Lottery, for a smooth $590-million. Wayne Kozun, who is senior vice-president of public equities at OTPP said, "These types of investments are like infrastructure without the physical assets," Lee Sienna, vice-president of long-term equities for OTTP, likes the steady 3% growth from lottery sales. Web based gambling is the fastest-growing sector and will continue to grow at 11.1% per annum, according to data from H2 Gambling Capital.

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