Online Gambling Not Good for Casino Shares?

Casinos are cashing in their chips on poker, closing tables because the game’s reputation fades. But a a lot more dramatic alter is underway as gambling shifts in the casino floor to the Web.

On the web gambling is riding a winning streak with current legal victories. Even though Web gambling continues to be in its infancy, established on-line gaming websites like Zynga (ZNGA) could emerge as formidable rivals to standard market kingpins like the Las Vegas Sands (LVS), Wynn Resorts (WYNN), MGM Resorts (MGM) and Caesar’s Entertainment (CZR).

Given that New Jersey legalized in-state Web gambling two weeks ago, shares of International Game Technology (IGT), the No. 1 maker of slot machines for brick-and-mortar casinos, have climbed 8%.

GT stock has an IBD 98 Composite Rating, meaning it’s outperformed 98% of all stocks on essential metrics like sales and profit growth in recent months. Its shares have climbed 44% since dropping to a late July low.

Joseph Kelly, a State University of New York company professor who specializes in legal aspects of on the web gambling, says it is inevitable that cross-state-border on the net gambling will emerge.

“The horse is out on the barn door. I never believe any federal bill to block online gambling will go anywhere now,” Kelly told IBD.

Last October, Zynga announced a partnership with U.K.-based on the net gaming giant Bwin Party to launch for-money gaming in the U.K., which includes poker, 180 other casino games and FarmVille-branded on the internet slot machines.

The Sands, the world’s biggest casino corporation by income, MGM, Wynn, Caesars and other folks are placing on the net gambling systems in spot to attract players.

But the Web isn’t their turf.

Casinos have produced their billions hosting gamblers in enormous, glamorous resorts. They’re going to quickly face stiff competition from companies that have built a huge presence in on the internet entertainment.

On-line game companies using the clout to take on casinos include Pc and console game giants Activision Blizzard (ATVI), with about $5 billion in annual income, and Electronic Arts (EA) with almost $4 billion.

China’s Netease (NTES), with $1.3 billion in sales, can also be noticed as a contender.

Although game makers and social networks may have an advantage, they do not hold each of the cards.

Shares of Caesars and Boyd Gaming (BYD), which own huge casino resorts in Atlantic City, rose sharply following New Jersey legalized on-line gaming.

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