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Feb
5th

Gaming Stocks Up Following DOJ Decision

Shortly after the United States Department of Justice clarified the 1961 wire act markets reacted favorable for gambling stocks. The DOJ ruling clears the way for legal internet gambling in the United States and several states have already announced plans to provide games such as internet bingo and poker to residents. Part of the DOJ ruling stated that “interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside of the reach of the Wire Act.” Various securities firms weighed in on the issue. In a statement  Numis Securities said: “This is a major change in the position of the US DOJ. At the very least it clears the way for state level online poker legislation. Potentially it opens the way for gambling services to be provided from offshore and this may encourage the US Congress to legislate before the floodgates open.”

Simon French a Panmure Gordon analyst told reporters “In effect this will make state online lottery, casino and poker legal, where appropriate state regulations exist and lay the foundations for interstate, non-sports gambling.” Mr. French recommended that investors buy 888 Holdings shares because the state of Nevada has approved regulations that will permit the state to issue internet poker licenses. French stated “888 is the only UK-listed company to receive Nevada Gaming Commission suitability approval and we expect it to supply software to Caesars Entertainment to operate in Nevada.” In Nevada MGM Entertainment and Boyd Gaming stocks showed double digit increases in January. Both companies have expressed interest in online gaming.

The positive market sentiment raised share process for gaming giants William Hill and Ladbrokes. Both companies have a presence in the internet gambling industry in the UK. Several UK gaming companies saw a dramatic rise in share prices following the DOJ’s decision. Bwin was one of the largest beneficiaries and Bwin shares rose 23% on the first day of trading following the DOJ decision. Some gaming analysts say that the celebrations are premature. One gaming industry insider said that the US internet gaming market will develop piecemeal over the next decade and that some states have unrealistic revenue expectations.

Some experts say that most internet gambling operations will be heavily taxed and subject to intense scrutiny. Currently most states plan to offer poker but as time goes on more games including online bingo will be added to the internet gaming menu.