Will Wall Street Gamble on World Poker Tour Stock
Written by Tom L | Thursday, March 15th, 2007
The game of poker has seen many highs and lows over it’s history. Non higher than when Chris Moneymaker won the 2003 World Series of Poker Main Event which caused an explosion in the poker world and possibly none lower than when the US Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006.
This aimed at not necessarily making it unlawful to gamble online, but rather
to halt the transfer of money between US financial institutions and off-shore online gaming companies.
In recent months though, World Poker Tour Enterprises (WPTE) shareholders might feel they have seen the lows of poker as the stock has dropped to well under $5/share while just a couple years back it was trading at an all time high of over $29/share.
So is Wall Street cashing in all it’s chips on the WPT stock? Well, not so fast.
Some analysts believe now is a good time to buy thanks to the coming launch of WPTE’s newly redesigned online poker site later this year. WPTE admits it’s previous attempt to enter the online poker market failed due to using a third party software company to run its site and also that it had several technical problems that caused it to crash quite often.
The company insists that it has taken care of these problems and that it has invested heavily in software that it plans to roll out sometime in the second quarter of 2007.
Although the site will only be available to players outside the, most analysts believe the WPT name brand is known enough globally to take a decent size stake of the estimated $1 billion market globally.
In 2006, WTPE generated $3.2 million in online gaming revenue which equated to around 10% of the companies total revenue.
While online gaming may be the companies best bet going forward in the future it currently generates the majority of it’s revenue from US TV licensing deals for it’s shows like the World Poker Tour (WPT) and Pro Poker Tour (PPT) which currently air on the Travel Channel.
While some may feel the online poker market is a scary one these days for investors after the huge losses posted by companies like Party Gaming (PRTY.L), 888 Holdings (888.L) and others which are listed on the London Stock Exchange and have recently pulled out of the huge US market, others believe this was simply due to last year’s changes in the US that went into effect when President Bush signed the UIGEA of 2006 into law and that going forward the international market will level itself off.
According to Clint Morrison, and analyst with Minneapolis based Feltl and Company, “The whole story is going to be WPT bringing up their new online poker site. That’s where the real growth and the upside for the stock is. They should be able to leverage a strong brand in what is a large and profitable market.”
While the WPT online poker site won’t be available to residents many other privately held online poker companies still compete in the large market which is believed to be at about 23 million avid online players.
Sites like Full Tilt Poker and Poker Stars have remained dedicated to providing the online poker experience to US residents even after the recent pull out of top payment processor Neteller from the market. This is quite evident as current stats have both online rooms showing well over 60,000 players playing online on any given night.
While the legality and more importantly the ability to play online poker in the maybe in limbo currently, many legal experts believe poker enthusiasts will continue to find places to play online and deposit their hard earned money.
Even though WPTE will have to currently go international to find it’s players, many industry insiders hope the latest announcement that US Congressman Barney Frank, who is chairman of the House Financial Services Committee, will be working on legislation to repeal the Unlawful Internet Gambling Enforcement Act of 2006. Frank called the ban one of the “stupidest laws” ever passed, saying he wants to “repeal” the law.
Other good news for investors and the online poker industry as a whole is the appointment of former New York Senator Al D’Amato to chairman of the Poker Players Alliance which is a lobbying group representing over 100,000 US poker players that is fighting for the legalization, regulation and taxation of online poker within the US.
These two recent developments should at least give some ray of hope to both online gaming investors and US poker players alike as any involvement by current or former politicians only helps the effort to regulate online poker in the US and if anything brings more attention and credibility to the fight on prohibition.
World Poker Tour Enterprises, Inc. (WPTE) which currently trades on the NASDAQ ended the day at $4.93/share.
News Source: Bryan Hauer
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· Written by Tom L · Filed Under Poker News · Comments Off
