It’s here we are at investors to put away any reservations they\’ve already about the morality of gambling. It’s everywhere C on your TV, in the corner store and, most notably, on your computer, and there\’s simply too much growth to disregard.
Just in case you haven’t noticed, there\’s been a flurry of online gaming companies appearing in Canada, quickly vaulting the country into second place in terms of industry market cap behind the uk, where several TSX-listed names occur to do most of their business.
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Investors are understandably jaded concerning the materials and energy space given poor returns seen in the past few years, however they may be willing to take on some more risk within their portfolios using the equity market starting to act a bit better.
“This really is one sector that seems to be growing when there is a low-growth environment globally,” said Greg Taylor, a portfolio manager at Aurion Capital Management. “We’re starved for non-resource growth ideas also it really doesn’t have just as much economic sensitivity because the resource sector.”
H2 Gambling Capital, the industry’s go-to source for data, forecasts the value of the global online casino and bingo market will swell to around US$13.5 billion by 2018, representing a compound annual growth rate of more than 10% from 2014.
Those type of numbers have caught people’s attention and therefore are a big driver of some impressive returns in the sector.
Electronic gaming has quickly emerged as more than just a cottage industry in Canada. Amaya Inc.’s US$4.9 billion acquisition of the top-ranked PokerStars and Full Tilt online poker brands managed to get the largest publicly listed on the internet company on the planet.
That spawned several spinoffs as Amaya looked to reduce its debt load, nevertheless its share price performance is constantly on the make a large amount of people very happy. Making its market debut in April 2010 at $1 per share, Montreal-based Amaya now trades around $35 as investors appear to be looking past an insider trading investigation in Quebec C for now at least.
It dominates online poker, but with revenues in that industry declining slowly, Amaya is wanting to branch out into other casino games and sports betting.
Anyway you can help a government make money is probably a good thing
The company also really wants to expand beyond its primary market in the U.K., and the United States is the place to be. On the internet is legal in just a few states such as New Jersey and Nevada, with other people taking a critical look given the tax revenues they convey in. If the U.S. market reveals, Amaya is ready. And when they same ever happens in Asia, the development would be tremendous.
There are a growing number of other companies – some using their roots in Amaya – offering attractive growth opportunities for investors in areas for example software, fantasy sports, online payments and even bingo. Not only are many of them making money, however they provide a diverse selection of offerings that could suit various amounts of risk tolerance.
Intertain Group Ltd., which started like a spinoff from Amaya, has set its sights on dominating the online bingo market. The Toronto-based company no small player having a market cap of $1.3 billion because of a gain of 155 percent for the stock price in the past year, but it’s also a safer way to play the gaming space and attractive from a demographic point of view.
Bingo also doesn’t have the same reputation problems poker has, its growing in a healthy clip also it appears that regulators and governments have grasped onto it.
Innova Gaming Group Inc. operates lottery terminals that look like slots, but are essentially just digital ‘scratch and win’ tickets. That can help avoid the regulatory scrutiny traditional slots encounter. Consequently, the Ontario Lottery and Gaming Corp. is really pushing these terminals in bingo halls and gasoline stations across the province. The?Stoney Creek, Ont.-based clients are also doing handles various U.S. states.
“Anyway you are able to help a government make money is probably the best thing,” Taylor said.
At the other end from the spectrum in terms of size is technology-focused Gaming Nation Inc., located in Thornhill, Ont., with a market cap of about $80 million.
Its core clients are the 50/50 cash draws popular at major sporting events. But rather than the old-school way of doing it with two rolls of tickets, Gaming National provides online terminals in stadiums with live pots fans can track.