There is a sense that the online casino industry has been in a state of suspension for a while now. With a lot of talk about the possibility of a repeal of the ban in the U.S. and the changing of regulatory conditions in many European jurisdictions as well, there is a sense that a lot of people are waiting for something to happen.
This atmosphere is not limited to the context of national regulatory environments either. Just a couple of days ago here we reported on how the potential introduction of live dealers and real-time gaming at many online casinos is a very hot topic for discussion at the moment.
At the end of last year Microgaming introduced the concept of allowing players to customize their online casino environment and now Betboo, a subsidiary of Gaming VC has just introduced a customization system where players have greater control over their playing environment as well.
The business model for online casinos is quite well developed so the scope for innovation in that area is somewhat limited. That said, creativity and innovation have never been an area in which the online casino industry has been lacking.
Over the last few years this has included things such as the creation of various variations on traditional casino games and branding games with popular culture icons from the worlds of movies, comics, music etc.
This trend towards online casinos allowing customization of the playing environment would seem to be quite a natural extension of this type of philosophy. Whether it becomes a more standard offering across the industry remains to be seen but for now these two companies are leading the way in one regard.
Barney Frank’s bill to regulate online casino activity in the U.S. continues to gather support. Just recently, Peter Welch of Vermont and John Larson of Connecticut added their support to the bill.
This type of sponsorship does not of course, guarantee a vote but it certainly does indicate a strong level of support nonetheless.
It wasn’t long ago that Frank’s bill looked dead in the water. When the full effects of the global economic downturn began to hit home, it began to look as if the bill might be put on the back-burner for an extended period of time.
In actual fact what happened was that the severe reduction in Government revenue at both state and federal levels has caused a whole new level of interest in the area of online casinos.
In these recessionary times, existing sources of revenue have dwindled and new ones with any real potential have been extremely difficult to source. Online casinos have always been very lucrative and the current economic situation has caused many countries to look at ways of generating taxation revenue from the sector.
The U.S. is no different in this regard and as a result there has been renewed interest in repealing the 2006 ban from many politicians who would have either previously been against it or had no interest at all.
When something concrete might happen in the U.S. is still not clear but momentum has been building for a while now and continues to do so.
One thing that people always love to try to do is predict the future. It seems to be an intrinsic part of the human condition. When it comes to the world of online casinos, there is one prediction that seems to be everybody’s favorite at the moment. All the buzz seems to be surrounding the area of live real-time dealers
Is there a real appetite for this among consumers or is it simply an example of the industry trying to guess what people want?
There is certainly some evidence from consumer surveys to suggest that there is real appetite for this but as any failed politician can tell you, polls are not a reliable metric on which to base decisions.
Within the industry, not everybody is in agreement on this subject to the extent that the media coverage might suggest. A large and growing number of people have floated the idea that introducing large numbers of live dealers and real-time gaming would not address the reason why consumers are showing interest in this in the first place.
The main reason that is causing the consumer interest is a lack of faith in the software that runs online casinos. Unfortunately, there have been a few high profile stories about corrupt or malfunctioning online casino software. These stories have resonated very strongly with a public that has already accepted the idea of not putting to much faith in computers as advanced in the pop culture narrative of a dystopian future.
Certain facts seem to have been overlooked in the mix. Online casino software at all reputable online casinos is now of a very high standard both in terms of fairness and robustness.
So, ultimately the real question remains. Is this a matter of needing a better system or simply a matter of doing a better public relations job with an existing one.
It’s no secret that all of the online casino industry stock prices have been suffering on the back of third quarter numbers and forecasts and 888 Holdings has had to take some of the pain just like the other major players in the sector.
Wednesday October 28th 2009 saw a decrease in the share price of again. At the opening of trading the value of shares stood at 95.10 and at the end of the day the price stood at 94.00 .This leaves the price 1.06 percent lower than the Tuesday October 27th price of 95.00 and 0.2% higher than the 93.75 on Monday.
Over the course of the day the highest value of the shares was 96.80 while at another stage the shares traded at a low of 91.235 this gives us a window of 1.1% from low to high during the day’s trading.
The volume of shares trades over the course of the day comes in at 1.84 M so this decrease in the share price was based on fairly heavy activity.
When looked at in the context of the broader market, the type of numbers on display here seem to be broadly in line with what is happening across the sector. Online casino stocks have have had an overall performance level that has been down but not drastically so over the last ten days.
One of the major cases that has been getting a lot of ink recently is the seizing of casino related domain names by the state of Kentucky. The subsequent case taken by the owners of the domain names has made it all t he way to the Supreme Court in the state.
Since the original case one appeals court has already ruled that the seizures were unlawful and should never have taken place. Given the circumstances, it came as no surprise that the state then pretty much immediately appealed this decision to the Supreme Court.
This seizure has affected 141 online casinos and there arguments for both sides have been heard in the court at this stage. A final ruling is expected in the next few days.
In a broader sense, this is another example of the somewhat confused approach by the powers that be to the whole area of online gambling. On the one hand there has been gathering momentum to repeal the 2006 ban and replacing it with an environment of regulation and taxation.
Yet, as the likelihood of that type of situation has grown, law enforcement agencies have become far more aggressive in pursuing the existing laws and those they perceive to be operating outside of them.
There seems to be an inherent contradiction in this approach and it serves as a perfect example of the lack of joined up thinking that has plagued this are of legislation since long before the 2006 ban.
Partygaming is another company that has been struggling in the markets on the back of the third quarter numbers season. The stock saw downwards shifts for most of the trading days last week and started this week on the same trajectory today.
The stock closed today at 242.80 which is 0.08% down on Friday. This is was also down on Friday at 243.0 . That price is 1.64% lower than the Thursday’s 247.00 and 2.26% lower than the 248.50 on Wednesday October 21st.
Trading volume has remained high over this period which would suggest that there is a level of interest in the shears from investors but just that it is currently the wrong kind of interest that is being shown.
The bright spot is this is that the negative sentiment is sector wide with all the major players taking a hit over the last few trading days. There is nothing to suggest that PartyGaming is in any way being singled out for special attention.
While there have been a few exceptions to this, the downward movement in stock prices is something that has affected the whole sector for the most part.
By any standards, it has been a negative week for all the publicly traded online casino stocks on the markets. Firstly, there is of course, the blatantly obvious reason for this that comes in the shape of the global economic downturn.
While the world of online casinos has done better than a lot of other sectors, the size and depth of this recession has meant that nobody has gone completely untouched by it.
Last week also was the start of the third quarter numbers period with some companies releasing forecasts and others releasing actual hard data. The negative numbers all round were certainly a major factor in depressing market confidence in the sector.
There is also the ongoing problem with the uncertainty that surrounds regulation in many jurisdictions. Governments tend to move very slowly and because the whole area of online regulation is still very new, this combination of moving slowly and not being quite sure what to do has served to create all sorts of confusion.
So what does the future hold for the industry? If I knew the answer to that one I would be a very wealthy man indeed! That said, it’s not all doom and gloom and there are actually some positive indicators that can be pointed to.
Firstly, as I alluded to earlier, the industry is actually performing a lot better than the vast majority of other sectors that are represented on the stock markets.
Secondly, there are signs that the regulatory conditions in many jurisdictions are actually quite close to being properly sorted out. Over all the industry has weathered the storm very well. And, you have to remember that this is the industry that already survived a blanket ban in the U.S. which is by far the largest market.
When you take these things into account, it would would be overly optimistic to suggest that the future for the industry actually looks very bright indeed.
It was an unusually volatile and negative week on the markets for Cryptologic. It is the third quarter number time of year at the moment. Many of the companies in the retail sector of the industry have either made negative forecasts or released negative numbers.
Unfortunately for Cryptologic many of these marquee names are also partners of the software provision company. In more positive times this helps the company share price but at the moment the fact that the fortunes of Cryptologic is very much tied to its retail partners is damaging investor confidence.
The stock was at least stagnant on Friday October 23rd. At the the end of the trading period 4.25 was the share valuation. This leaves the price 1.17% down on the Thursday October 22nd price of 4.30 and leaves the price 4% down from 4.42 on Wednesday October 21st
During the day the shares hit a low of 4.25 and during another phase the highest value of the shares was 4.39. This shows that there was some rallying in the price but unfortunately it was short lived.
It is generally understood that there is a solid base to this company so a guess would suggest that the price is unlikely to drop much lower when trading reopens next week. Having said that, these are unusual times so even that guess could prove to be inaccurate as ultimately we will just have to wait and see.
The 888 Holdings share price rallied on Friday October 23rd after a very difficult week on the market. The company had experienced some volatile conditions due to the third quarter forecasts and number announcements.
Sentiment from investors had been quite negative earlier in the week for all the major players in the sector but the second half of the week has seen 888 perform a better than the general trend across industry shares.
The shares were up on Thursday with 93.60 being the standing of the shares at the close of business. That is all of 0.6% higher than the Wednesday’s price of 93.00 and this price is 0.8% up on the Tuesday October 20th price of 92.80
In the context of how the shares have been performing since Wednesday, the modest gain again today is not that big of a surprise. 94.258 was the closing price today and this is 0.70% up on yesterday.
Given that this has been going on for a few days now, it would not be too optimistic to suggest that this is actually change of attitude among investors after the third quarter industry numbers had shaken confidence a bit.
A report just published by The Australian Federal Productivity Commission suggests that the country should remove its current online ban and move to a situation where regulation rather than prohibition is the order of the day.
This report is based on a wide-ranging study that the commission has undertaken to examine online casinos both from a business and a consumer point of view.
The report suggests that rather than protecting consumers, the current ban is actually opening them up to an international unregulated market and and is also not satisfying its original goals in many other key areas as well.
The commission has assessed that online gambling has been accounting for approximately 4 percent of the overall national gaming market even while the online ban has been in place and that despite efforts to police the ban, that this number is rising rather than falling.
When it comes to actually making decisions, there is no doubt that the Australian Government will also be acutely aware of the potential revenue that could be garnered from regulation and taxation of the sector.
Australia is of course, not the first country to take another look at the regulation of the area and the potential revenue attached to that. As we have reported here before this type of examination has been going on in many different countries around the world in the last few months.
