Casino Companies Are In For an Overhaul

In just a few years' time, the casino business that we've become familiar with may be changed completely. New technology and an expanded acceptance of mobile technology by regulators will begin turning the traditional casino upside down.

Slot machines may be replaced by iPads, table games will be electronic, you will be able to play from your room, and online gaming will be everywhere.

This isn't a negative for gaming companies. In fact, it creates a huge opportunity and it may open up gaming to a new breed of consumer.

The revolution is here
Bally Technologies (NYSE: BYI  ) and International Game Technology (NYSE: IGT  ) were granted the first online game licenses in Nevada earlier this year, and casino operators  Boyd Gaming (NYSE: BYD  ) , Stations Casinos, and the Golden Nugget were the first casinos recommended for approval for intrastate online poker . Online poker was big business in the U.S. until the Feds shut down Poker Stars and Full Tilt Poker, and this is another step on the way to a comeback.

The Global Gaming Expo last week also showed a new generation of games for casinos. No longer will casinos have to buy a $20,000 slow machine when an iPad can hold more games and costs only $500. The possibilities for games begin to open up pretty quickly with devices like this.  

Opening up to a whole new customer
Some casino games have always been intimidating to play. Once you move beyond your first penny slot machine as a new gambler it's intimidating to sit down at a blackjack table or play poker against real people. Mobile gaming and new devices can alleviate some of these jitters. Online gaming and mobile gaming is an opportunity to expand the customer base for gaming companies at a time when gaming has stagnated in many locations.

Forcing the Fed's hand
This may eventually push Congress to lay out a framework for regulating and controlling online poker and other online games of chance. Nevada is the first to go forward with online gaming, but others will soon follow. Even those who want online poker legalized admit that federal regulation makes more sense than 50 different sets of rules.

Most casino operators would jump at the chance to offer gaming on a federal level. MGM Resorts (NYSE: MGM  ) and Caesars Entertainment (Nasdaq: CZR  ) would be two of the biggest players in all likelihood. The companies own some of the world's most well-known gaming brands including Caesars' World Series of Poker.

But not everyone is bullish on online games. Las Vegas Sands (NYSE: LVS  ) chairman Sheldon Adelson has spoken out against online poker and hasn't made any indication he intends to participate in the potential boom in the gaming business. We'll see if he changes his tune if MGM and Caesars start raking in profits from online games.  

The next gaming boom
The companies that have benefited from gaming's boom in Asia may not be the companies that benefit from an online or mobile boom in the U.S. Caesars and MGM have been dogged by debt in recent years, but they would be huge beneficiaries of online games. Las Vegas Sands may be left in the dust online unless Adelson changes his tune.

But the big winners may be IGT and Bally's. These companies will provide the technology needed for online gaming and will open up a new revenue stream. The gaming revolution isn't a done deal yet, but it's time to start preparing for it because policymakers aren't stopping it.

For many companies, successfully capitalizing on a booming Chinese economy is like winning the jackpot. That's certainly the case for gaming company Las Vegas Sands, which made a big bet on Macau gaming about a decade ago that's paid off in spades. The company is now looking to spread its empire further, but will it be able to replicate its prior successes? Learn about all these opportunities, and the risks they pose, in our brand-new premium report on Las Vegas Sands. We're providing a full year of analyst updates to go with it, so make sure to claim your copy today by clicking here.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. 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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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 October 12, 2012, at 5:51 PM, cp757 wrote:

    This is an example of one of the problems online gambling has.

    Full Tilt Poker defrauded players by misrepresenting that player funds on deposit in online gambling accounts were safe, secure, and available for withdrawal at any time. In reality, the company did not maintain funds sufficient to repay all players, and instead, utilized players' funds to distribute more than $400 million to Full Tilt's owners. By March 31, 2011, two weeks before the initial complaint in this action was unsealed, Full Tilt Poker owed approximately $390 million to players around the world, including approximately $160 million to players in the United States. At that time, Full Tilt Poker had only approximately $60 million on deposit in its bank accounts. ...

    Kind of hard to make a profit. The Feds are not happy with on line gambling.

    Feds Want Lederer's $10.5 Million Las Vegas Mansion

    Sep 12, 2012

    On Tuesday, nearly a year after the U.S. government accused poker player Howard Lederer of helping orchestrate Full Tilt Poker’s fraud, prosecutors have released details of where the player money went.

    Lederer is on the hook for about $42.5 million worth of assets that the feds say are “traceable” to illegal activities in running Full Tilt.

    Also facing the loss of assets, but no jail time, are Chris “Jesus” Ferguson ($42 million) and Rafe Furst ($11.7 million). The four individuals have been called “FTP Insiders Defendants” by the DOJ. They served as the company’s board of directors.

    Travis that was close they almost put "Jesus" in jail but Bally Technologies (NYSE: BYI ) and International Game Technology (NYSE: IGT ) were granted the first online game licenses in Nevada earlier this year, and casino operators Boyd Gaming (NYSE: BYD ) , Stations Casinos, and the Golden Nugget will be a great place's to put your money if you follow "Travis Picks" but I think it will be a long time before you see some real money.

    Just thought I would add that Las Vegas Sands recorded 1.19 million visits during the holidays

    10/12/2012

    Sands China Ltd. properties recorded 1.19 million visits between October 1 and 7 to its four Macau properties, a 39 percent increase in visitation compared to the same period last year.

    Occupancy numbers for the company’s guest rooms was 100 percent.

    There were 3.26 million Macau Border Crossings for Golden Week, remember this is only the boarder crossing. With Sands in Macau having 1.19M visits between Oct 1 & Oct 7th this could mean LVS/SCL had 1/3 of all visitors in those 7 days.

    With a 39% increase in visitations YOY and a 100% guest room occupancy I would expect LVS to do very well .

    Travis why dont you point these things out ?

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