Bwin Surges as New Jersey Opens Gaming Floodgates: London Mover - 27th Feb 2013

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Bwin.Party, the gaming company that has a partnership with Atlantic City’s top-grossing casino, surged to a nine-month high after New Jersey approved Internet betting and Morgan Stanley said the stock may quadruple as the U.S. market opens to online gambling.

Bwin.Party rose as much as 15 percent to 158 pence, leading advancing stocks on the FTSE All-Share Index. (ASX) It was up 13 percent at 11:27 a.m., boosting its market value by about 140 million pounds ($212 million), to 1.25 billion pounds. About 4.2 million shares traded, or 35 percent more than the daily average in the past three months.

New Jersey Governor Chris Christie signed legislation yesterday that opens the door to online gambling in the state in an effort to help struggling casinos. “This should benefit industry leaders with proprietary technology, such as Bwin.Party (BPTY) and 888,” analysts at Morgan Stanley led by Vaughan Lewis and Thomas Allen wrote in a note today.

Bwin.Party has partnership agreements with Boyd Gaming Corp. (BYD) and MGM Resorts International (MGM), co-owners of the Borgata Hotel Casino & Spa, the top producing gaming facility in Atlantic City. 888 Holdings Plc (888) has an agreement to provide technology to Caesars Entertainment Corp. (CZR), the largest operator in the beachfront resort.

The analysts raised their price prediction on Bwin.Party shares to 200 pence from 160 pence. 888 Holdings, which gained as much as 8.3 percent to 162.75 pence, may rise to 175 pence, they said.

More States

The potential opening of the U.S. market, where states including Pennsylvania and Florida are among those close to offering online gambling, could mean that Bwin.Party and 888 shares will more than quadruple, the analysts said.

“The USA is the largest single gambling market in the world, and we see long-term potential worth up to 460 pence per share for 888 and 560 pence per share for Bwin.Party,” they said.

Online gambling in New Jersey could be a $1.5 billion annual business in five years, Dennis Farrell, a casino analyst at Wells Fargo Securities wrote on Jan. 24.

“Federal efforts for a U.S. online poker bill fell short in 2012 and we expect legislation to pass on a state by state basis,” James Ainley, an analyst at Citigroup Inc., wrote in a note today, upgrading Bwin.Party to neutral from sell.