Online Casino BTDino

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Friday, October 07, 2005

Banned online gambling

But should investors share Mrs Meston’s optimism when it comes to online gambling shares? Richard Hunter, the head of UK equities at Hargreaves Lansdown Stockbrokers, believes that they should. He says: “Gambling used to have a cloak-and-dagger feel. Now you can bet from the comfort of your own home or the office. People who would never set foot in a casino are playing virtual poker online and you can now bet on just about any sport, along with financial stocks and indices.” However, not everyone is as enthusiastic about the future of online gaming. Ryan Hughes, of Chartwell Investment Management, cites resistance to its expansion in the US as a threat to investors.

Online gambling is still illegal in the world’s biggest market. In a rare alliance of God and Mammon, the Church and the casinos of Las Vegas have joined forces to lobby against online gaming companies. This has prompted several big banks and credit card issuers to stop processing online gambling transactions.

Mr Hughes says: “Even if the US relaxes its stance, that could result in the creation of large US gaming companies which could take away market share from UK rivals.”

Justin Urquhart Stewart, of Seven Investment Management, says that the sector has all the hallmarks of a bubble about to burst. He says: “There is excess capacity in the market and some of the smaller players are bound to collapse, which will create nervousness among investors. This is also an unregulated sector which runs the risk of fraud and money laundering. If the sharp growth in share prices continues, there will be a classic mismatch between the stock market valuation and the real price of the business.”

Mr Hughes says that anyone considering buying internet gambling stocks should question whether it will be a sound investment over five years. “The growth in these stocks has been so quick. No one can be sure that it is here to stay,” he says.