Online gambling surges as New Jersey Governor backs the industry

Online gambling stocks soared Friday after the Governor of the US state of New Jersey said he would legalise betting on the internet if it had a 10-year trial period and higher tax rate on casinos.

Online gambling stocks soared Friday after the Governor of the US state of New Jersey said he would legalise betting on the internet if it had a 10-year trial period and higher tax rate on casinos.

Chris Christie vetoed a bill to sanction online gaming on Thursday but said he would support the move with some minor changes including bumping up the tax rate on casinos from 10% to 15%.

Advertisement - Article continues below

"Now is the time for our state to move forward, again leading the way for the nation, by becoming one of the first states to permit Internet gaming," Christie wrote in a statement.

"While Atlantic City's reputation and stature as one of the premier resort destinations on the East Coast are well-chronicled, it is no secret that revenue from the region's most important industries, gaming and tourism, has been in decline."

Had Christie signed off on the bill, New Jersey would have become the third state to legalise gambling over the internet.

The market gained a day later from the leader's support of the industry. was among the biggest beneficiaries as shares rose 18.25% to 138.00p at 13:43 Friday. Online poker company 888 jumped 14.04% to 132.00p while Playtech surged 7.11% to 52.50p.

Cannacord had predicted the outcome, saying was most likely to gain the most out of the governor's statement. It issued the company with a 'hold' rating and a target price of 122p.

"It was the market leader in the US online poker market prior to the [Unlawful Internet Gambling Enforcement Act] and has a [business to business (B2B)] partnership with Boyd Gaming, which operates an Atlantic City casino," the broker said.

"It is significantly the cheapest stock in the sub-sector given concerns over exposure to Germany and a structurally challenged European Online Poker market.

Other major recipient 888 - which has a B2B partnership with Caesars, another Atlantic City casino operator - was also given a 'hold' rating along with a target price of 125p.

The broker placed a 'buy' rating on Playtech with a target price of 604p, saying it was well placed to reap rewards as the only B2B company that is listed. "...we would expect it to secure B2B licenses, given a number of casino operators that have yet to commit," Cannacord concluded.




Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular


These seven charts show exactly why you must own gold today

Covid-19 is accelerating many trends that were already in existence. The rising gold price is one such trend. These seven charts, says Dominic Frisby,…
3 Jun 2020

Disease, rioting and mass unemployment – so why are markets soaring?

Despite some pretty strong headwinds in the last year, America’s S&P 500 stock index is close to all-time highs. John Stepek explains why markets seem…
4 Jun 2020

This looks like the biggest opportunity in today’s markets

With low interest rates and constant money-printing, most assets have become expensive. But one major asset class hasn’t. John Stepek explains why com…
2 Jun 2020