Company Is Strengthening Its Hand in Online Poker

Don't think that casino giants are the only businesses thinking about the potential profit bonanza from online gaming. Sure, MGM Resorts (NYSE: MGM  ) , Boyd Gaming (NYSE: BYD  ) , and Caesars Entertainment (Nasdaq: CZR  ) have a lot riding on online poker's potential legalization in the U.S., but there are suppliers who are chomping at the bit as well.

Shuffle Master (Nasdaq: SHFL  ) has its sights set on being a major supplier in the online gaming business. The company is already able to offer proprietary games to potential online companies, but it made a move yesterday that may allow the company to expand into online poker.

The company announced it was acquiring Ongame, a company with a platform to provide online gaming capabilities across multiple devices, from bwin.party. This will allow Shuffle Master to offer a host of services to online gaming operators, including poker and proprietary games on mobile devices.

Proof is in the pudding
Shuffle Master is becoming more confident and capable of making these moves because of its own financial success. The company just reported a 28% increase in fiscal first-quarter revenue, to $56.1 million, and earnings per share of $0.14.

This followed strong earnings from competitor Bally Technologies (NYSE: BYI  ) , which also supplies casinos with games and shows nice momentum in the industry. With gaming expanding throughout the world and casinos fighting for customers, suppliers should be sitting in a strong competitive position.

Foolish bottom line
These moves will allow Shuffle Master to capture business in the online gaming space (where it's legal) and build a base of customers in anticipation of U.S. regulation. Bwin.party is one of the leaders in the online gaming space and Ongame has developed products for its platform. I expect this acquisition, as well as Shuffle Master's proprietary games, to continue to drive their growth beyond the casino floor. 

I'm adding an outperform CAPScall on My CAPS page as a result of the positive news today.

Interested in reading more about Shuffle Master? Click here to add it to MyWatchlist, and it will find all of our Foolish analysis on this stock.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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Read/Post Comments (2) | Recommend This Article (2)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 07, 2012, at 10:17 AM, cp757 wrote:

    Travis this points out how hard it will be to buy one or two stocks that would take advantage of this online gaming play. I would think that when Facebook has its IPO, that they will say they will take advantage of online gaming just as Twitter does now in Europe. I won't even get into the world wide numbers on that one. Then you have Activision Blizzard, Inc (ATVI) and they have millions of players that will migrate to the most interesting games they can find. Would Activision look for revenue in online gambling ? The Indian Casinos will get licence's so that will cut into the market a bit. What I really find odd is the number of CEO's going on TV to tell every one that they will be saved by online gaming. I have a hard time with the number of players that will offer online gaming never mind picking which Casino would benifit. I also think regulation will be a nightmare and making sure it will be policed will be hard as well. Don't get me wrong I am all for it. Give em what they want till it hurts. I am just finding it hard to "follow the money".

  • Report this Comment On March 11, 2012, at 12:47 AM, cp757 wrote:

    This is the three year anniversary of the bottom of the stock market crash . Thirty six months for Las Vegas Sands share's to go from 1.38 cents a share to 54.83 dollars. That means if you had $13,800 dollars at the bottom of the crash on 03/09/2009 and you bought 10,000 shares you would now have $548,300 dollars on 03/09/2012. With 10,000 shares you would be paid $10,000 dollars on your dividend every year. That's a 72% return of the money you invested 36 months earlier, and that's just on the dividend, and over a 3,500% increase in your stock price. No other stock did that .

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