Commission Has Has Analysts Crowing
Published: Wednesday, May 03, 2006 Online-Casinos.com
AGA CALL FOR INVESTIGATIVE COMMISSION HAS THE ANALYSTS CROWING
Bullish sentiment abounds after American Gaming Association call for congressional commission
Perhaps predictably, the call by the American Gaming Association for a congressional investigation into online gambling before moves are made to ban it has enjoyed widespread approval from analysts. industry firms and the players. This week the mood was decidedly bullish.
Online gaming is the fastest growing Internet business and is expected to expand at a compound annual rate of more than 14percent, reaching $25.2 billion by 2010. By then, the sector is expected to represent 7.7 percent of the international gaming industry, which garners about $258 billion in gross gaming yield, according to Global Betting and Gaming Consultants in the U.K, which defines gross gaming yield as gross turnover minus winnings paid out.
"We are now even more confident that the current prohibition attempts, and any future proposals, placed before the House of Representatives will fail," brokerage firm Numis said in a recent note to clients. "This should be taken very positively for the online gaming stocks."
In a regulated online gaming industry, U.S. casino operators would be free to exploit their name and brand and set up their own online operations, opines Investec leisure analyst Matthew Gerard.
"They're [US land casino operators] missing out on a high-growth market [and] by being excluded it certainly does them no favours and I think they realise that. They would like to see the industry regulated," said ABM Amro's Pacitti.
The big casinos could also build their traditional businesses with the online sites. "There must be cross marketing opportunities for them, to attract online users and than attract them into their casinos," Pacitti said.
Online players vary greatly from traditional land gamblers who like to have a flutter on slot machine or a table during a night out with friends. Traditionally, around 70 percent of bets placed with U.K. bookmakers were on horse and greyhound racing for example. But online punters wager on other events, Pacitti said. "Online, it tends to be a case that younger people place bets on different events, like football or golf."
Pacitti says that while players in the U.S. and Europe are enjoying the online gaming phenomena, Asian players still prefer traditional casinos, due in part to slow Internet connections and fear of using credit cards online. "Broadband still has relatively low penetration in mainland China for example and it's still a cash based society so people are reluctant to use their credit cards," he added.
In a bid to capture some of the untapped online gaming market in Asia, U.K.-based and recently London listed Playtech runs a "live casino" out of a warehouse in the Philippines. The "live over the Internet" casino, which was set up almost three years ago, is filmed with real dealers and a live CNN television screen to prove its real-time authenticity to players. The games are beamed onto licensed gaming websites, a Playtech spokesman said.
The casino was set up to "penetrate into Asia," he added, but declined to provide any player or earnings numbers from the casino.
