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Christmas Gift for Internet Gaming Industry

December 27, 2011 7:19 pm
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Christmas Gift for Internet Gaming Industry

The US government played Santa Claus and handed a big Christmas gift to internet gaming companies right before Christmas on Friday. The justice department finally clarified that the Wire Act applied only to sports betting, and would not apply to States’ rights to offer intrastate lotteries online, paving the way to clear all the other good stuff such as poker, black jack, etc. for state residents to play.

This has a big impact on the gaming industry, and is particularly positive for those providing technologies to enable internet gaming. Some of the stocks in this space are International Game Technologies (NYSE: IGT), GigaMedia Limited (NASDAQ: GIGM), and CryptoLogic Limited (NASDAQ: CRYP).

In fact, the micro cap stocks in this sector, such as GigaMedia, jumped almost 25% from $0.8/share to $0.99/share on Tuesday when the market resumed after the holidays. With this new development, competitions are bound to increase, and we might even see a pop in game companies such as Zynga (NASDAQ: ZNGA), which already has one of the largest online poker game communities. Further consolidation is also likely, and we shall see more M&A in this space, similar to the recent proposed purchase of CryptoLogic by Amaya Gaming Group.

Most of the companies in this space are micro cap stocks, so for investors who plan to play online lotteries, these stocks might just be the tickets.

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