While attention in the U.S. is focused on the slow start to online gaming, especially poker, a revolution is occurring that could significantly change the investment outlook for Internet stocks.
It’s called in-play betting and its growth is directly tied to the explosion in betting on mobile phones.
In-play is simply allowing bettors to make a proposition bet while a game is in progress, something like whether the New York Yankees will hit a home run in the next inning.
In the past, proposition bets were set before a game began and were limited in number.
But with in-play betting and today’s technology, such bets can be made during the game. That is a lot more fun for a bunch of guys sitting around a bar or in a sports book watching the game on the big screens.
The number and types of bets are growing, too, thus adding to the fun.
The combination of mobile and in-play betting is proving powerful.
One recent report is that sports betting in Sweden is up 50 percent over last year because bettors can wager on their mobile devices while World Cup matches are occurring.
The phenomenon of mobile wagering already is big. William Hill reported a 78 percent increase in mobile sports betting in the first quarter. Last year mobile growth was 116 percent. Mobile now comprises 45 percent of WMH sports bets.
Betfair mobile wagering grew 70 percent last year and now comprises 64 percent of sports bets.
Forty-five percent of Paddy Power’s sports bets are on mobile devices.
And the trend is bound to grow as more providers develop apps for mobile play, and as in-play bets move from novelty to common place. Indeed, some game developers now offer their games on mobile platforms before they offer them on standard computers in a reversal of the historic pattern.
Of course, mobile gaming is growing generally, which raises another phenomenon worth watching—can companies that developed in one line of business use their dominant presence to move into another?
William Hill and Paddy Power, for example, are historically sports betting companies with their beginnings as betting shops in the British Isles.
But the ability to draw players online also means they have the chance to offer players casino games. In fact, online gaming, which provided WMH with 30 percent of its revenue last year, was divided 52 percent gaming and 48 percent sports betting.
Amaya Gaming, will soon own the largest regulated online poker company in the world by far when it closes on the purchase of Rational Group.
AYA already has lots of games through its other operations, including Class II slot maker Cadillac Jack. Offering casino games to poker players is a natural play off its poker market share.
And Betfair, the pioneer and dominant player in exchange wagering, has opened a convention online sports book.
Another technology rapidly making its way into the e-market is the ability of players to move back and forth from sports book to casino on the same device without having to close out of one to open another.
There are lots of issues that complicate investing decisions among companies that are online. The 15 percent point-of-consumption tax that goes into effect in the UK this year is forcing WMH to shut 109 marginally profitable betting shops. Betfair says the tax would have cost it £36 million last year.
Companies are growing internationally as more nations—and, the assumption is, U.S. states—regulate online gaming.
But a company’s ability to take advantage of the revolution in mobile gaming is certainly a factor to be considered in any investment analysis today.