Casino News: 888 and Bwin.Party Grow despite Plummeting Market

As Greece rocks the Eurozone with an unsteady economy, the FTSE 100 falls 3.4% after opening, and 228-year-old US brokerage firm, MS Global goes bankrupt, it’s a wonder there is any positive financial news at all.

But there is. And once again, it’s in the online gaming industry. Bwin.party Digital has bucked the falling trend, and is now up to 120.7p -- a rise of 11p. The price jumped following the announcement of a deal in the United States. The agreement is a 15-year deal with American casino operators MGM Resorts and Boyd Are. In the past, online gaming groups have had lengthy legal battles in America, but the caveat to this particular deal will be subject to relevant US legislation and licensing. Bwin is aiming to enter the North American online poker industry, and the alliance is central to this strategy.

There are several different poker-regulation bills working their way through the political machine at the moment, and Bwin is currently looking at a suitability review in the state of Nevada. James Hollins of Evolution Securities said the possibility and timing of legislation remained an important question, however, he welcomed the move.

“This is a potentially huge long-term deal that, along with bwin.party's excellent European assets and brands, supports our bull stance. Short-term risk remains over changes to German legislation, but we think this is priced in and the shares are good value on current estimates.

Paul Leyland of Investec, agreed it was an interesting deal but warned, “We would not get carried away for three reasons. One, legalisation of poker is still likely to take some time and bwin.party's 'suitability' is not guaranteed. Two, a US regulated poker market is likely to be far less lucrative than historical '.com'. Three, medium-term performance should still focus on Europe.”

Elsewhere in the online gaming sector, the 888 Group has positive news, with shares rising from 0.75p to 33.75p. Full year earnings are anticipated to be significantly ahead of market projections. Third-quarter revenues shot up 42% to $86 million. Nick Bartram pf Peel Hunt changed his recommendation from hold to buy, saying the performance of 888 during the third quarter was “stunning.”

In a statement, he said, “There are still plenty of challenges on the horizon for 888, and the industry in genera, but the group is now converting strong top line growth with into margin accretion. Under the stewardship of Brian Mattingley there is now a greater focus on bottom line delivery. We believe that there is much more to come and once again 888 is looking like a valuable industry asset.”