Special Report: Do iGaming Stocks Fit the Bill?Published April 14, 2016 by Lee R
A young market in the world of big stocks, iGaming presents investors with some interesting questions. Here are some introductory facts on online gambling stock performance, and where will it go in the future to come.
A great new stock opportunity is every investors dream: can online gambling fit the bill?
At this point, online gambling represents a relatively fledgling market not even five years old, with plenty of room for growth.
What Do We Really Know?
At first glance, it appears there is not a lot to go on. Of the limited selection of global markets where online gambling companies are currently being publicly traded, Canada jumps out as a market where significant trading of online gambling stocks has already taken place, and continues.
Canada´s online market growth has emerged from a trend of new entry: a flurry of online gaming companies recently cropped up in the Toronto Stock Exchange to vault the Canadian market into second place in the online gambling industry market cap behind the United Kingdom, where the largest sports betting sites in the world have been thriving for years. London is also where many of the international online gambling companies listed on the Toronto Stock Exchange started doing the bulk of their business.
Growing in this Economy
The current global economy is characterized as a low growth environment by experts. Aurion Capital portfolio manager Greg Taylor pointed out to the Financial Post last June that online gambling is “the one sector that seems to be growing,” further explaining that financial managers are “starved for non-resource growth ideas.”
Industry data source H2 Gambling Capital forecasts the value of the global online casino and bingo market swelling to about US $13.5 billion by 2018. This represents a compound annual growth rate of more than 10% from 2014, the first full year after the first (three) states in the US started regulating online gambling.
At that level, 10% growth represents a huge rise in volume which has translated into significant returns for early players in the online gambling sector. Early competitiveness appears to stem from a successful combination of relatively low operating costs, superior technology and development, and strategic mergers.
The biggest gaming company to date comes out of Canada. Montreal-based Amaya Inc.’s recent $4.9 billion purchase of the top-ranked PokerStars and FullTilt online poker brands made Amaya the world´s largest publicly listed online gaming company. Since opening at $1 per share on the Toronto Stock Exchange in April 2010, Amaya reached a high of $31 per share, but recent allegations of insider trading which prompted CEO Baazov to take an indefinite leave of absence are casting their shadows nowadays.
Overall, the global online industry is capped by countries that have not yet regulated the practice. Regulation is currently limited to a core of countries allowing online gambling within their national borders. Within a global environment where Aurion´s Taylor characterizes any growth as a commodity, more and more countries may eventually seek to harness the potential nine to ten figure infusions of revenue that effective online gambling regulation models can deliver via taxes and licensing fees.
Charting the Course
Indicators of potential future market growth include passage or nearing of passage of regulation legislation. Further, competitors tend to follow each other across global markets. Legislation-wise, so do neighboring countries, or countries connected by history, recent background, or sovereignty.
Gauging the Speed
The speed depends in no small part on regulation legislation in each respective country. All legislation is reported on in iGaming trade journals and major news agencies.
Watch and Learn
For all stakeholders in the online gaming implementation process, from professionals to players, online stocks constitute a learning process which promises to continue. As far as the growth shown by publicly traded online gambling stocks so far, the incoming share value of impending iGaming market entrants to sustainable markets have nowhere to go but up.