Companies: 888    CYBV    INGG    PRTY    PTEC    RNK    SBT    WMH   

In a careful examination of the thought-to-be-extinct US-facing online gaming industry, Arbuthnot notes that the Unlawful Internet Gambling Enforcement Act (UIGEA) is unlikely to be repealed under the current administration, despite rumours of ‘a powerful lobby on the Capitol to overturn [it]’. The broker doubts that ‘there is sufficient political capital in the issue’ or much likelihood that ‘mainstream’ politicians will care. Thus, recent market conjecture leading to strong recent outperformance of the formerly US-facing stocks should be used as an opportunity to ‘take profit’.

Current cases brought by the US Department of Justice against duo BETonSPORTS and NETELLER, says Arbuthnot, do much to support the Department of Justice’s view that ‘online gambling is synonymous with malpractice, fraud and other overtly criminal behaviour’. Thus, ‘the balance of risk is on the downside’ and more charges could yet be brought against ex-US operators, meaning ‘the sector isn’t in the clear yet’.

Examining the wider sector, the broker currently holds the following stances: 888 Holdings, sell (target price of 76p); Cyberview, strong buy (350p); Inspired Gaming, neutral (225p); PartyGaming, sell (15p); Playtech, neutral (310p); Rank, sell (153p); Sportingbet, neutral (57p); William Hill, reduce (530p).