Gaming Stocks Getting Bought as Legal Internet Gambling May Be One Step Closer (LVS) (BYD) (PTEK)

December 27, 2011 9:23 AM EST
Stocks in the Casino & Gaming sector are looking strong early Tuesday following reports legal gambling on the Internet is getting one step nearer to reality.

According to reports Tuesday, the U.S. Department of Justice has reversed a long-standing rule on cross-border wagering over telecommunications systems, a move which may allow states to open the door to Internet gambling.

The Wire Act of 1961, which constricts states' ability to regulate wagering over telecommunications systems (put in place over lottery tickets), has been a barrier for the expansion of taxable revenue for states. New York, for example, has been running a website allowing residents to play a string of lottery bets or Mega Millions drawings.

But imagine how much more revenue could be garnered should folks in Connecticut, Delaware, New Jersey, California, etc., be allowed to place bets too.

With passage of more-lenient gambling laws, smaller players like PokerTek (Nasdaq: PTEK) and Boyd Gaming (NYSE: BYD) will also press for expanded rules, allowing for the addition of games like poker, black jack, and other traditional casino games to be set-up virtually, and legally.

CNBC cites Massachusetts state Treasurer Steve Grossman as estimating the size of online gambling varies from $6 million to $100 billion. Although even at the low-end, all of those funds are going offshore to places where the practice is legal.

It's not clear what steps the gaming companies will take to broaden legislation, but removal of one overhang should accelerate the process moving forward.

Shares of Las Vegas Sands (NYSE: LVS), Wynn Resorts (Nasdaq: WYNN), MGM International (NYSE: MGM), Boyd and PokerTek are all moving on the news. While the three major players are up under 0.5 percent in pre-market action, shares of Boyd are up 3.5 percent while PokerTek shares are 16 percent higher.


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