Uglyowl
07-11-2006, 07:20 AM
US gaming bill to hit UK online stocks short term
Tue Jul 11, 2006 6:22 AM ET
LONDON, July 11 (Reuters) - The latest U.S. attempt to ban the multibillion-dollar online gaming industry from its virtual shores will take a step forward this week, but looks set to fall short of its goal, London-based analysts say.
News flow is likely to hit shares in the sector, but will provide short-term buying opportunities, they added.
Rep. Bob Goodlatte of Virginia is the latest U.S. opponent of Internet gambling, which is estimated to generate about $12 billion a year globally through 2,300 sites.
Goodlatte's bill has been merged with that of Rep. Jim Leach of Iowa, and seeks to bar gambling businesses from accepting payment by credit card, cheque, wire or Internet.
It will be heard by the House of Representatives this week, possibly as early as Tuesday, gaming analysts say.
"The Republican leadership has made the bill a priority in its `American values' agenda, and hence it is likely that the bill will pass," Morgan Stanley analysts said on Tuesday in a research note.
But analysts say it is unlikely to go much further due to a lack of time in the Senate.
The progress of the bill has given gaming investors a rollercoaster ride in recent months, with stocks like PartyGaming <PRTY.L> and 888 Plc <888.L> swinging wildly on the news.
Goodlatte has tried and failed before, but this time his bill could be boosted by the absence of disgraced Washington lobbyist Jack Abramoff, who represented gambling interests in the past but has been at the centre of a U.S. influence-peddling probe.
Leach has also tried previously, and failed.
"We have been here before," ABN Amro said in a research note. "Leach's proposals passed a vote in Congress in 2002 and again in 2003 but never reached the Senate."
Analysts say this week's debate might prove irrelevant as there are so few congressional days in which the bill could be heard before U.S. elections in November.
"Only about seven or eight weeks of Congress will be left for the merged House bill to negotiate the various Senate committees," said Richard Carter at Numis Securities.
"In our view this is not enough time for the bill to progress, given the tight end-of-Congress legislation timetable in the Senate," he added.
But the likely impact on shares will provide opportunities for investors.
"We continue to believe that full passage into law is very unlikely, and would look to buy PartyGaming and Sportingbet <SBT.L> on any weakness," said Morgan Stanley.
ABN analysts had the same view in a note on PartyGaming, and said recent share price weakness had been accentuated by some of the founding shareholders selling stock last week.
"We believe the shares to be undervalued on a 2007 EV/EBITDA multiple of 8.5x and a 2007 P/E of 9.5x our estimates," they said.
Tue Jul 11, 2006 6:22 AM ET
LONDON, July 11 (Reuters) - The latest U.S. attempt to ban the multibillion-dollar online gaming industry from its virtual shores will take a step forward this week, but looks set to fall short of its goal, London-based analysts say.
News flow is likely to hit shares in the sector, but will provide short-term buying opportunities, they added.
Rep. Bob Goodlatte of Virginia is the latest U.S. opponent of Internet gambling, which is estimated to generate about $12 billion a year globally through 2,300 sites.
Goodlatte's bill has been merged with that of Rep. Jim Leach of Iowa, and seeks to bar gambling businesses from accepting payment by credit card, cheque, wire or Internet.
It will be heard by the House of Representatives this week, possibly as early as Tuesday, gaming analysts say.
"The Republican leadership has made the bill a priority in its `American values' agenda, and hence it is likely that the bill will pass," Morgan Stanley analysts said on Tuesday in a research note.
But analysts say it is unlikely to go much further due to a lack of time in the Senate.
The progress of the bill has given gaming investors a rollercoaster ride in recent months, with stocks like PartyGaming <PRTY.L> and 888 Plc <888.L> swinging wildly on the news.
Goodlatte has tried and failed before, but this time his bill could be boosted by the absence of disgraced Washington lobbyist Jack Abramoff, who represented gambling interests in the past but has been at the centre of a U.S. influence-peddling probe.
Leach has also tried previously, and failed.
"We have been here before," ABN Amro said in a research note. "Leach's proposals passed a vote in Congress in 2002 and again in 2003 but never reached the Senate."
Analysts say this week's debate might prove irrelevant as there are so few congressional days in which the bill could be heard before U.S. elections in November.
"Only about seven or eight weeks of Congress will be left for the merged House bill to negotiate the various Senate committees," said Richard Carter at Numis Securities.
"In our view this is not enough time for the bill to progress, given the tight end-of-Congress legislation timetable in the Senate," he added.
But the likely impact on shares will provide opportunities for investors.
"We continue to believe that full passage into law is very unlikely, and would look to buy PartyGaming and Sportingbet <SBT.L> on any weakness," said Morgan Stanley.
ABN analysts had the same view in a note on PartyGaming, and said recent share price weakness had been accentuated by some of the founding shareholders selling stock last week.
"We believe the shares to be undervalued on a 2007 EV/EBITDA multiple of 8.5x and a 2007 P/E of 9.5x our estimates," they said.