The public as usual, is ahead of the gamblin. Leagues will try to make the case that as owners of the sport; they're best qualified to control betting. With the increasing viewership base for sports and increasing broadcasting rights, our analysts predict positive growth prospects for this market.
History, as does the stock market, has a way of confounding its most astute observers. Casino gambling, which had been part of the Nevada frontier culture for decades, moving in imternet out of legalization, got its final, and lasting, seal of approval in And there it sat, mostly in Reno, until the denizens of eastern mob and union financiers linked arms with the locals and Mormon bankers in Las Vegas to create that dream in the desert.
Nevada enjoyed its monopoly for nearly 50 years until the second state, New Jersey, opened it doors to the Resorts International Casino in But once it became clear that Atlantic City uncovered how underserved the East Coast was in terms of casino gaming, legalization, state by state, began to get faster footing.
New states were nursed to legalization with various fig leaves to protect lawmakers from blue-nose constituencies. We had tribal casinos, riverboat casinos and racinos proliferating wildly in state after state hungry for revenues and jobs. Since New Jersey in and today, 38 years later, 20 states now host commercial stcks and 30 tribal-owned properties.
There are today 1, casinos in the U. There is hardly an adult soul in the country more than two hours away from the nearest slot machine or table game. During all of this frenetic gold rush some of which has proven to be fool's gold as cannibalization increasedone thing became clear: The old assumptions about how speedy gaming legalization can happen were blown to bits.
Now, states pressed even harder to find non-direct taxation revenue streams to relieve their enormous appetites for government programs are turning to the next in line golden goose they see: Nobody now knows how long it will take for sports betting legalization to reach the penetration of casinos. Most recently the New Jersey Supreme Court nixed a sports betting bill that had pushed its way past the legislature, causing some observers to believe it will be a very long haul.
Others aren't quite so sure. In fact, for the first inteernet ever, the industry's official lobbying entity, The American Gaming Association, has gotten behind the effort to pass a national law to legalize sports betting so it can be taxed, strictly regulated, controlled and most of all, taken out of illegal control.
Currently, sports betting is intrenet by a federal law, The Professional and Amateur Sports Protection Act, which prohibits legal betting on sports nationally with a grandfathered carve out for the existing four states that already legalized it: Nevada, Delaware, Montana and Oregon.
The AGA is lobbying Congress heavily to recognize that the lb. We suspect that the same pattern that emerged to spread casinos gamblinh between the s and today will come into play in sports betting. We think its going to arrive much sooner than later. The traditional part of the electorate that opposed casinos so vehemently over the last decades has thinned considerably. The public as etocks, is ahead of the onternet. But the AGA is hardly alone.
The professional sports leagues, which in the past have fought hardest and longest against sports betting initiatives, have softened their stances within the last two years. The commissioners of the four major sports leagues are on record now as recognizing that a legal, regulated, strictly overseen, licensed and taxable, revenue base is preferable to the present illegal state of gamb,ing.
Their statements range from outright support for federal legislation, to simple recognition of the reality. Clearly, this reveals what ordinary Americans understand: The notion that athletes who earn millions of dollars a year in pro sports and the college players aiming letra de roulette that status would be total idiots to compromise themselves by conspiring with bookies to earn relative chump change by throwing games.
The last college sports betting scandal was in when pro sports athletes weren't making much more than your average used car salesman at the time. And unless you've been living on another planet over the past 30 years, you know that betting is the single strongest driver of the mammoth TV interneg enjoyed by NFL games.
In fact, the AGA study also revealed that individuals who bet on NFL games watch 21 more games on average per season than do other fans. Free roulette tournament they are head-to-head buddy or office betting friends, or people with regular accounts with local bookies, this much is clear: Gamblint is a gigantic business, untaxed, unregulated, and run by interndt elements.
With momentum gathering to legalize sports betting from traditional pools of vigorous opposition, it would appear that legalization, if not around the corner, will begin to appear, either in federal or state-by-state laws at a quickening pace. The handmaiden of this quickened pace will of course be technology. Also driving momentum is the massive proliferation of participation in fantasy sports gaming over the last five years.
Despite the federal carve out that labels poker and its gqmbling online gaming elements, "games of skill" and therefore not subject to gaming laws, attorneys general all over the nation have challenged the fantasy sports application of the skill-based principal. State by state they have gambling online site suggest banned fantasy sports, put it on hold, or like New York, in response to challenges, have put in regulatory oversight and permitted the likes of DraftKings and FanDuel to operate under a state-wide wagering board.
This again is fig leaf stuff. It puts a regulatory framework around fantasy sports but in effect does not do what is inevitable -- i. To presume it is a skill based game is an absurdity. As a game it has more resemblance to parimutuel betting than it does to anything even resembling chess, Chinese checkers or Monopoly. What fantasy sports have done however, is to further focus attention on the activity of sports betting and by it, revved up sentiment for a single national law to govern it and direct sports betting as well.
What we will see in state after state is legislation bringing fantasy sports ever closer to the level of regulation now governing horse racing and, in some william hill roulette 20p, casino gaming.
As this matures, pure sports betting legislation whether at the federal or state level, will happen and thus open the floodgates to entries into the business by existing and new, possibly disruptive players. We believe that from a historical perspective as well as the changing attitudes of the electorate, that we will see some kind of sports betting legislation start to move within the next three to five years. But the shares of companies most likely to enter the space will start moving a lot sooner than that.
If sports betting achieves legalization, either in a cluster of new states, or nationally, the structure of how that newly legal product will be offered to the public could take any number of forms. The profit potential is so immense you can count on something akin to the Oklahoma land rush of regarding the number of companies or entities charging past the starting gate. The insatiable greed of sports leagues to squeeze out every last penny of their fan bases is well known. Remember it was their realization that the TV networks that were coining money on their games that sent so many teams into the TV business to harvest as much of the regional ad cash as possible.
This will undoubtedly happen if sports betting goes legal. Leagues will try to make the case that as owners of the sport; they're best qualified to control betting. But they have complications, such as their revenue split and merchandising arrangements with their athletes. Should the players get a share? And of course there's the ever-mounting illegal and legal gambling for the NCAA to get religion and start paying their kids.
It's a tough argument to say the least; the kids are already getting a four-year free ride in school. But we raise the gamblijg as a complexity that could impede the leagues from dominating the business. The states, which share the revenue greed of the leagues, could wind up passing online gambling legal or illegal that assign to itself the business of sports betting as a natural extension of its lotteries.
But past noble biggest roulette win in uk in state controlled sports wagering, such as New York's ill-fated OTB racing history, ended in ignominious bankruptcy after decades of william hill not working and government bungling.
Yet the states have in large done an excellent job running and marketing their lotteries and that, they will say, qualifies them to inherit the sports wagering business. It means lots of political patronage jobs to dole out in addition to the revenues. But if it does, as we shall see there are public companies who can win contracts to run the business, as they have done with the lotteries.
More on that later. Existing public companies with the financial heft and know how to hit the ground running and generate immense earning power. They have existing technology in place, intermet management and marketing skills and can offer states or the federal government, the simplest most direct benefits if they legalized: Every month they'll get a check. All they need do is regulate as they already do for casinos and collect the cash. That's why I rate the probability very high that existing operators in the space whether by contract with states or in a free for all licensing competition, will be at the very least, players in the activity going forward.
This will include brick and mortar casinos, such as those already running sports books in Las Vegas, online gaming operators and valises roulettes companies in gaming. This group would include what we believe will eventually be publicly owned fantasy confidential gambling operators like DraftKings and Fan Duel -- and others staking a claim to unique technical and marketing sports know-how.
Now struggling out of their own self-created over marketed mosh pits, they dtocks transferring from a daily format to season long focus. It remains to be seen how they will fare. In all forms of sports betting mobile will play an immense role. Participants like ESPN, whose overall user base is nose-diving must be reckoned with, as does Verizon's new baby, Yahoo. It had an excellent fantasy sports site utterly neglected by brain-dead Yahoo management. Other major networks, like CBS, stopped by the sector for a cup of coffee during the fantasy heydays last year, but again we don't see running a pure gaming ingernet fitting into their corporate strategies.
Our top picks for investing visionaries who want to get ground stocka positioning if and when sports betting is legalized are as follows. We've evaluated the entire landscape of public companies we believe represent short term low risk entries in the gaming space and long-term excellent prospects to participate in the burgeoning sports betting space. For purposes of space and focus, we are only recommending two, which we believe for various reasons are best positioned to move forward.
We have a third, Amaya OAY. SG the Quebec-based major global poker site, that we likewise think is very well positioned for the space. We're holding our opinion on AYA pending a broader review of the shares in a later article next month. Amaya beat street expectations with stocks strong Q2 report. Our criteria here is this: What is the risk profile to buy the shares now with the idea that the stock will rise as publicity and increasing news of serious legislative consideration of sports betting will move the shares in the near gambling online wto intermediate term -- well before actual laws are passed.
And naturally after any such laws do pass, clearly the market will respond to these stocks, companies we believe, that will be in the thick of the battle to participate on a stlcks scale in the sports betting business. In several internwt over the past year we have argued that we believed this solid company was wildly overvalued. Here we will u our view entirely based on our appraisal of the company as a potentially major player in the sports betting space.
But briefly for context, we'll merely tsocks that our previously expressed bearish view on the pricing of this stock was not a critique of management -- which we deemed strong -- but of the small coterie of institutional holders who control the stock. It's a thinly traded issue, heavily owned by institutions for reasons I believe partially result in good performance, but mostly because of an odd mesmerizing impact of its participation in the online social gaming site, Big Fish games.
As a matter of fact its strong Q2 performance was to some extent based on the results of a single event: There are no more Kentucky Derbies this year. That said, let's examine the a few fundamentals. Churchill operates in four basic areas with passive investments in other relative businesses, such as automatic tote equipment. It is among the best, most widely respected, high integrity, online horse wagering sites in the world. Its site design is imminently adaptable to sports betting because gabling is already engaged in daily sports wagering on racetracks all over the nation and the world.These casino and gaming stocks that could benefit in a big way from the passing of online Currently, no U.S. state allows for online gambling. New Jersey became the second state to approve online gambling, with Gov. Chris Christie approving a bill this week. Companies like Zynga. A number of online gambling companies have begun cropping up in Canada, quickly value of the global online casino and bingo market will swell to about US$ billion by , “These aren't risky stocks,” Daviau said.