Goldman Sachs: PartyGaming, 888, Playtech, Bwin to surge on legal US egaming
Bwin, PartyGaming, Playtech and 888 will benefit most if the US legalises online gambling, Goldman Sachs has forecast, while Bwin and Playtech will rise most in value.
BWIN, PARTYGAMING, Playtech and 888 will benefit most if the US legalises online gambling, Goldman Sachs has forecast, while Bwin and Playtech will rise most in value.
As reported on EGRmagazine.com yesterday, the investment bank predicts the US will legalise internet poker and casino, creating a combined market worth up to $12bn.
“In our view, the companies most likely to benefit from any deregulation activity in the US are Playtech, PartyGaming, 888 and Bwin “ all of which have sufficient scale and own proprietary poker and/or casino software,” the bank said in a report to investors yesterday.
“However, on our base case assumptions, the two stocks with the most significant upside potential are Playtech and Bwin.”
The note explained that European online gambling operators in general are well placed to benefit from US liberalisation, but that opportunities are more likely in business-to-business (B2B) than via obtaining direct business-to-consumer licences (B2C).
However PartyGaming and 888 will not rise in value as much as Bwin and Playtech because investors have already factored in American opportunities to their value, the bank argued.
“Clearly, B2C would be the most accretive. However, we regard B2B as the more likely route to market. On our estimate, the potential accretion to 2010 earnings per share (EPS) could be most material for PartyGaming under both a B2C (117% accretion) and B2B (40% accretion) basis if the US online poker and casino markets are legalised,” the Goldman study stated.
“However, we also believe that PartyGaming’s share price already reflects more of this optionality than any of the sector peers. Qualitatively, if B2B does prove to be the most significant opportunity in the US, we believe that Playtech, as a pure B2B player, would be in a strong position relative to the ‘operator’ peer group.”
The bank cautioned that there are “a number of potential hurdles to overcome”, however, including the possibility of Congressmen Jim McDermott and Barney Frank’s anti-UIGEA bills failing, and individual states making slow progress if they decide to follow California and Florida‘s moves toward regulating intrastate egaming. Other obstacles include licence arrangements and tax rates.
As reported on EGRmagazine.com recently, PartyPoker and 888 remain the highest profile poker sites for US web users despite UIGEA, while 888, SpinPalace and Casino.com are the most visible casino sites for Americans.
For more on US federal regulation of egaming, see our Barney Frank feature. Or for more on California’s talks on intrastate online poker, see our California poker feature.
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