Online Gaming Is on Its Way

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The day online poker players have been waiting for is coming closer to reality. Last week, Bally Technologies (NYSE: BYI  ) and International Game Technology (NYSE: IGT  ) were granted the first online gaming licenses in the U.S., paving the way for online games online.

Before you start rounding up cash to put into an online poker game you may have to wait a while. The license allows the companies to provide systems and services to casino operators, not yet to offer games online.

Bally will use the license to offer its iGaming platform to casinos and IGT plans to push its poker product to operators. According to Bloomberg, two dozen companies have applied for online gaming licenses, so the market for these products should be significant. MGM Resorts (NYSE: MGM  ) and Caesars Entertainment (Nasdaq: CZR  ) look to be two of the dominant players, and the Gaming Control Board thinks online betting may hit Nevada in late 2012 or early 2013.

In a move I find ironic, Las Vegas Sands (NYSE: LVS  ) is likely to at the very least be late to this party. Sheldon Adelson is against the legalization of online gaming and appears to still be holding out. That could change if the market grows as big as expected, a level that H2 Gambling Capital expects could reach $13.4 billion in five years. Adelson has been a leader into new markets, and I think he'll be forced to get into this one, even if he is late to the party.

Forcing the Fed's hand
This is the first move that will force the hand of federal legislators in the near future. The Justice Department said that betting on things other than sports contests was not illegal, paving the way for the recent licenses.

But so far, Nevada is standing alone. Washington, D.C., and Iowa have struck down online gaming laws while New Jersey is yet to have a final vote. These were supposed to be leaders in the online gaming movement along with Nevada.

There's a long way to go, but for MGM, Caesars, Bally, and IGT, this single step forward is a positive. Online gaming could be a huge boon for the industry, and I think before long, the federal government will be forced to legalize it in some way, shape, or form.

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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 (4) | Recommend This Article (3)

Comments from our Foolish Readers

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 June 25, 2012, at 5:31 PM, kurtullman wrote:

    While the DoJ may say it is legal, isn't there still a law on the books saying that payments can't be routed via credit cards or banks online? Is there any real possibility of widespread acceptance of poker online if there is no good way to move money.

  • Report this Comment On June 27, 2012, at 10:22 AM, gspchamp999 wrote:

    The Wire Act of 1961 was ruled to only apply to sports betting and poker is defined as a 'non-sporting activity'. Poker has also been ruled in many court cases across the country as a game of skill.

    The transferring of money is no longer an obstacle.

  • Report this Comment On June 27, 2012, at 2:52 PM, spokanimal wrote:

    Should we allow everyone's home computer to be turned into their own, personal slot machine?

    Of course not.

    I count cards... and in the course of plying my trade, I run into a LOT of gamblers...

    Drunks betting out of control...

    Kids trying to sneak into the casino...

    Problem Gamblers betting their rent money...

    In a casino, it's all observed, it's public, and the gambler AT LEAST has to get off his couch to GO SOMEWHERE to lose his money.

    None of that exists on his home computer...

    ... he's free to drink Vodka until his pension is spent and he's deep in debt... while nobody is watching.

    Online gaming... baaad idea.


  • Report this Comment On July 17, 2013, at 3:03 AM, pplgood wrote:

    The steps taken by them is positive and will initiate people to play online games...apart from poker there are other games that are really amazing..

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