'The Motley Fool' - Online Poker Pessimism

Published: Tuesday, March 28, 2006 Online-Casinos.com

'THE MOTLEY FOOL' - ONLINE POKER PESSIMISM

Publication details why it thinks online gambling may be a bubble that could burst

Taking a rather dim view of online poker this week, the UK publication The Motley Fool gives reasons for its pessimism on the multi-billion dollar poker gambling industry.

Star Performers Can't Fail

When star performers in a sector reckon they are too big to fail then it may be time to worry. For instance, what can be more damaging for a business than to face losing access to its biggest market? Yet key players in the online poker arena that include 888.com and PartyGaming have brushed aside the threat of a damaging US bill aimed at stamping out Internet gambling. The bill, which has been cleared by the House Financial Services Committee, will prohibit gaming sites from accepting credit card, cheques and any form of electronic fund transfer. Online gaming bulls think the bill is unenforceable but the legislation could put the US out of bounds to online poker and gaming sites.

Crazy Valuations

When a company such as Fairground Gaming can raise GBP 4 million based on a business plan that involves buying up other players in the market then investors should perhaps take note. Fairground Gaming is currently valued at GBP 25 million, yet it neither generates a profit nor derives any revenue. Its sole purpose is to identify opportunities for consolidation in the smaller end of the fragmented online gaming sector.

Built-to-flip

One of the best ways to make money in a bubble market is to set up a business and sell it quickly. Take CheekyMoon, an offbeat online gaming company which was only formed in August 2005 by Lord Beaverbrook. It also counts David Baddiel of Baddiel and Skinner fame as one of its main shareholders. After less than a year since its formation, CheekyMoon has been sold to Pine Ventures, which in turn plans to float the business onto the market next month.