Reuters recently reported that Wynn Resorts Ltd (WYNN) has joined the bandwagon of applicants seeking Internet gaming license in New Jersey. New Jersey sanctioned the online gaming law in February this year. Online gaming in the state is expected to start in late November, which might get postponed to 2014.
Per Reuters, 12-land based casinos in New Jersey will offer Internet gaming in partnership with online gaming companies. Further, this legalization will also levy higher taxes on online gambling revenues compared to the current tax rate being imposed on casinos.
New Jersey is in fact the third state after Nevada and Delaware to legalize online gambling. Ironically, Wynn does not own a casino in Atlantic City, NJ. Therefore, it will have to team up with a brick-and-mortar casino, which currently holds a license, to develop or offer games.
We believe that a slow but steadily recovering US market prompted Wynn Resorts -- a Zacks Rank #3 (Hold) company -- to focus more on the domestic market. It is worth mentioning that the casino operator is reeling under pressure in Macau with just 2.6% growth in the recently concluded second quarter of 2013 while its Las Vegas operation witnessed an upside of 16.2%, indicating brighter prospects in the domestic market.
Apart from Wynn Resorts, other casino operators such as MGM Resorts International (MGM) and Caesars Entertainment Corp. (CZR) also remain quite hopeful on the growing demand for online gaming in the US. Reuters reports that analysts estimate online gambling to generate up to $1 billion annually in New Jersey and $50 million to $250 million in Nevada every year.
To capitalize on this opportunity, in Oct 2011, MGM collaborated with web poker firm Bwin – the owner of PartyPoker and World Poker Tour -- to offer online poker in the US once it is legalized. Another operator Boyd Gaming Corp. (BYD) also entered into a partnership with Bwin.party. Caesars Entertainment is expected to launch real-money online poker in Nevada under the World Series of Poker brand by the end of this year.
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