By 2020, online gambling inside the U.S. will create revenues as massive as these at present developed by the Las Vegas and Atlantic City markets – combined.
So says Morgan Stanley, which estimates a $9.three billion on the web market place in 2020 vs $6.2 billion for The Strip in 2012 and $3 billion for Atlantic City last year. The corporation adds that “we believe our industry estimates are conservative.”
Boyd Gaming is touted because the most significant stock play in that regard. From the Barron’s post re the analysis:
“We view BYD as finest positioned stock in our US coverage to advantage in the US on-line gaming opportunity given its positioning and relative size. BYD currently includes a $710 million marketplace cap, is 7x levered, and we expect it to produce $634 million of 2013 EBITDA. The other effectively positioned operator in our coverage for on-line is MGM Resorts International (MGM) however it has a market place cap of ~$6 billion and we expect it to generate ~$2 billion of EBITDA in ‘13e, creating on the net significantly less of a driver.”
Morgan Stanley, Morgan Stanley – why does that name sound familiar?
Oh yes, they have been a major player in the Revel Atlantic City casino, weren’t they? How did that perform once more?
“In 2010 Morgan Stanley took a 98% write-down of its $1.two billion investment in a proposed $2.six billion Atlantic City Casino [Revel]. Because of the downturn in Atlantic City, Morgan Stanley decided it was far better to sell its stake within the home than to ‘throw very good cash following poor.’
The project was also a public relations nightmare for the white shoe investment bank. Morgan Stanley had received tax rebates pursuant towards the project, drawing the ire of New Jersey residents who viewed them as an additional example of corporate cronyism. Labor unions derided the casino, claiming that rather of developing new jobs, it would develop a shell game of taking small business and jobs from other casinos. Morgan Stanley purchased the land in 2006 and hired an operator to run the casino. It then tried to sell an equity stake inside the house, to no avail – Morgan Stanley sold its stake within the half-built casino to an investor group led by the chairman and CEO of Revel Entertainment.”
Now, I’m being a little cheeky, in that these firms have a large number of staff – so that just because a number of them drove the firm toward the iceberg on Revel does not imply they do not have savvy analysts of the online gambling business.