European Companies Eager to Invest in American Interactive Gaming Market

European Companies Eager to Invest in American Interactive Gaming MarketMany investors and those in the financial world are raising their stakes in internet gaming firms. Most believe the US interactive gaming market will open in the next two years and three states have already legalized online gaming in the US: New Jersey, Nevada and Delaware. Giles Hargreave, manager of the top-performing £588m Marlborough Special Situations fund, has increased his company’s investments in 888 Holdings, one of the largest online gaming firms in the UK, Bwin.party Digital Entertainment and Sportech. Hargreave hopes to take advantage of the potentially lucrative American online gaming market.

Hargreave said he believes that Sportech is well positioned to take advantage of legalization in the US since the firm already has an exclusive licence to offer online horse racing betting in the state of Connecticut. Hargreave stated “America is relaxing the rules on online gaming, which is hardly surprising considering the tremendous amount of potential tax revenue on offer, and that makes companies such as 888, Bwin.party and Sportech very interesting.” Hargreave described his business strategy and stated “Weaker sterling is making companies more competitive overseas, interest rates are extremely low, and you have the switch from bonds into equities. We are also beginning to see a noticeable shift among small caps from earnings downgrades to earnings upgrades. Against that kind of backdrop, we think it is only sensible to be fully invested.”

Hargreave’s company is not the only one eying the US gaming market. Optimal Payments, formerly known as Neovia and Neteller, believes that up to 10 states in the US will legalize online gambling in the near future. The company is well positioned to take advantage of New Jersey’s legalization of online gambling. New Jersey plans to offer residents a variety of games including online bingo, slots, keno and other casino games. Optimal Payments has partnered with Caesars Entertainment and is in talks with other casino operators. In New Jersey all bets must be placed at servers located in Atlantic City casinos. Getting a gaming license will be difficult if not impossible for companies not affiliated with an Atlantic City casino.

Joel Leonoff, president and chief executive of Optimal Payments said “We think 10 states will offer entry to gaming,” and predicted that California will be the next state to legalize online gambling.  Leonoff, who was CEO of PartyGaming, now known as Bwin.party, said that he does not believe that Neteller’s previous prosecution in the US will affect his company’s planned reentry into the American online gaming market. Leonoff stated “There are different levels of compliance required for suppliers versus merchants [operators]. Merchants have a much more onerous regulatory requirement to adhere to.”

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