I read the same.. ZNGA will have nearly zero experienced competition for 5 Years! GLUU may steal a small portion but ZNGA will be on a steady climb for 5 years! 20-30 by then IMO. Time to load the boat!!
Sentiment: Strong Buy
Many Vegas casinos are deep in debt, Jersey too. Add to that the horrific state of the LV housing market and you get a desperate bunch of junkyard dogs willing to do anything to get back to their glory days.
Everyone thinks that the casinos hold all the cards and will be the primary beneficiaries. I see it the other way around. I think they smell their own blood in the water and are desperate to get high tech talent and strategic partners who can rev their engines again.
Now when you consider that many other states are in similar revenue holes, with massive debt and also terrible housing markets savaging their economies (think California, Florida, etc) who are also in need of new revenue streams and who don't have an aging broken casino industry to support but who can go directly to online gambling with much lower carrying costs, and are in a better position to attract companies who can facilitate their aspirations, and what you have is the potential for a bidding war to do business with modern tech companies who have basically a turnkey mobile gambling network they can tap into. '
Gov Sandoval of NV said for example that he hoped their new bill would attract tech companies to HQ in NV so that they could hit the ground running right away. I think that smells as desperate as it gets. I mean, why bother moving your HQ to NV when your home state (say California) could offer you a more lucrative partnership because they don't have any of the pre-historic regulatory baggage and fossilized, ruined casinos to prop up. Vegas wants you to continue to come to them so you can play online (ok, sure...) and eat their grimy food and drink their watery booze and rent their many empty hotel rooms. Sounds fun. Not.
Now consider that since all of the states preparing to enter the fray know that there are only a few independent companies with the skill, scale and ability to pull the levers and get things moving in short order those companies are in a great position to negotiate excellent terms in any partnership. And they DO NOT have to accept anything that reeks of exclusivity. NV and NJ are posturing because they want to support their old guard and still have a foot in the next wave. That might explain why you don't hear any "partnerships" announced just yet. Sooner or later, probably sooner than they like to think, NV and NJ will realize that they may have opened the doors (thank you for that), but they will not hold all of the cards after all. With their initial legalese full of junk that serves their existing land based casinos first and foremost, I don't think they will have anyone but the most desperate or the rookies willing to lock themselves into that mess. This is a sellers market. I will be disappointed in Pincus and crew if they threw themselves at any of the big name casinos unless the deals were non-exclusive to the extreme and had no onerous terms strapping them into NV or NJ territory, except perhaps a sattellite division. The casinos are dinosaurs trapped in ruined markets; tar pits. A smart company would sign on with states who want to be the NEXT great gambling hubs first, not the has-beens, unless the has-beens show some humility. They need to acknowledge that their walls are coming down. I think they know this already though, thus the arms race between NV and NJ.
Really, I am thankful that NV and NJ are making these moves, but only because they are giving this online gambling industry a jolt of media attention just as it is starting to change gears. I am actually pretty incensed at these states for their talk, or wishful thinking, of continuing to control future gambling. I think the whole reason they are making these moves at all are because they realize that they are about to lose control once and for all and if they want to have any significance at all, they need to get their butts positioned for the seismic shift before it completely buries them.
Sentiment: Strong Buy