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Motley Fool Looks At Potential Players In Legalized US Online Gambling Field

Written by:
Aaron Goldstein
Published on:
Nov/22/2010
online gambling

Should online gambling become legalized in the US, the Motley Fool has examined some of the likely players in a new i-Gaming environment. Among them, existing brick-and-mortar (B&M) casino businesses the likes of MGM Resorts International (NYSE: MGM) and Harrah's Entertainment, along with suppliers who displayed at last week’s Global Gaming Expo (G2E) in Las Vegas.  International Game Technology (NYSE: IGT) and WMS Industries (NYSE: WMS). 

Currently, online gambling enthusiasts place sports bets or play poker with companies that are based outside the U.S., mostly in jurisdictions like Great Britain, Costa Rica and European island nations like Malta and Gibraltar, where such activity is legal. 

Motley Fool’s analysis goes beyond the brick-and-mortars to include American Express, eBay, Google and Electronic Arts.

Jeff Hwang of the Motley Fool writes:

Just a few years ago, some casino operators might have argued that legalized online gambling in the U.S. would cannibalize existing B&M businesses. But in four days of conferences at G2E, I don't recall hearing that argument even once. In fact, Harrah's Entertainment is one of the companies now leading the push.

Hwang also highlights some competitive edges that companies like MGM and Harrah’s will have should they move online in the United States: Brand, trust, convenience and cross-marketing capabilities.

When it comes to the later, Hwang writes:

We've talked a bit over the years about Harrah's Total Rewards program and its cross-marketing capabilities, which have allowed the company to consistently produce above-average results with a portfolio of largely average properties. Harrah's Total Rewards program now has 40 million-plus members who earn points in places like St. Louis or Chicago, and redeem points at Harrah's properties in Las Vegas.

In addition to the established brick-and-mortars and the software suppliers, payment processors will play a vital role in any legalization.  The US Government has met with some degree of success in shutting down existing payment processing companies that deal in online gambling.

According to "Gaming White Paper," the top five non-gaming brands that would influence visitation from online or predominantly online gamblers are:

   1. Visa/MasterCard

   2. Google

   3. Yahoo!

   4. Amazon

   5. American Express

- Aaron Goldstein, Gambling911.com

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