Bally Technologies Inc. (BYI), International Game Technology (IGT): Online Gaming Is the Growth Opportunity for the Gambling Industry

Page 1 of 2

The global gambling market has been continuously dominated by casinos and lotteries, with each category contributing 34% and 29% respectively, of the total gambling revenues in 2012. The US is still the leading nation in gambling, and is likely to remain so in the near term. However, in the long term China is expected take over as the leading gambling nation.

Driving this industry are companies that are involved in the design, manufacture, and distribution of gaming and lottery machines throughout the world. Three companies within this market, Bally Technologies Inc. (NYSE:BYI), International Game Technology (NYSE:IGT) and WMS Industries Inc. (NYSE:WMS), have concentrated primarily on the American market. These companies were hit hard by the recent economic meltdown, but now as the industry show signs of improvement and recovery, the future of these companies looks promising.

Bally logoThe global casino gaming industry is expected to experience a CAGR in revenues of around 9.2% per annum, with the fastest growth coming from Asia Pacific (18.3%) and Latin America (8.1%). The US market is expected to grow at 5% per annum, and the majority of the growth is expected from regional casinos, while Nevada is expected to grow slower than the US market. Within the fastest-growing Asia Pacific region, the highest growth is expected to come from China (Macau), Singapore, the Philippines, and Vietnam. Macau has already surpassed Nevada as a gambling haven, and is expected to show further growth in the future fueled by growth in per-capita incomes and tourism in the country.

Another area of interest in the global gaming industry is the advent of online gaming in recent years. The global online gaming market reached an estimated $35.8 billion in 2012 and is expected to grow further, crossing the $41 billion mark by 2015. The US market is earmarked as one of the most lucrative markets, with an estimated worth of more than $12 billion, while the European market still remains the largest. Initially online gaming was banned by US regulatory authorities, but recently a few states have adopted regulations legalizing the market. This is likely to open up the flood gates as more and more states adopt similar regulations and legalize this industry, thus giving ample opportunity to companies to achieve growth in the domestic market.

The Opportunity

International Game Technology (NYSE:IGT), the largest of the three in terms of revenues, achieved a revenue growth of around 10% in the last fiscal year, showing signs of recovery after four consecutive years of decline. This four-year decline in revenues also resulted in a lower net margin, dropping well below its historic average of around 18% but recovering in recently reported results. The company was one of the first to launch online games, and also has focused on expanding its operations in the international market, particularly Asia. Now the company has become the most influential player in the global market, as well as the US, and this particular segment will help the company achieve growth in the coming years.

Bally Technologies Inc. (NYSE:BYI) also experienced a decline in revenues through the recession, but has achieved growth in revenues of more than 16% in the most recent fiscal year, helped by a strong growth in both the domestic and international market. Despite achieving growth, the company has failed to establish itself strongly in the international market, and continues to focus on North America. Also the company’s online operations are still relatively new, and although the company is making a great effort to enhance its user base through various agreements, it will need time to get recognition in the market. The company has continued its focus on the North American market in its most recent quarterly results, while making additional efforts to enhance its online gaming platforms in the US and the European market.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!