I am pretty close to online gambling. I have a very good friend and business partner who started one of the largest payment engines for online gambling sites.
Shortly after taking his company public the market cap hit 2 billion dollars and he sold his position. I have been watching over the years as the industry went through some amazing trials and tribulations, most notably the illegal ban by the U.S. government of online gambling in the U.S.
Let me start by saying that I think Elliot Spitzer is likely one of the dirtiest politicians to ever grace the face of the earth. He’s dirty, and not only does he loves himself a good prostitute; but rumor has it he also loves taking bribes from casino operators. It’s no secret that Elliot Spitzer made it his mission to lobby against and go after anyone associated with online gambling.
The rumor is Elliot enjoys taking rides on private jets that do not belong to him, apparently he was taking rides on the jet of one of the largest casino operators in Vegas who happened to be lobbying against online gambling prior to the illegal ban. Yes the story continues that Elliot was taking bribes from Vegas Casino Operators in the form of hookers and cash. It became his personal mission to put his extra tiny man parts into anything that walked and his sweaty bulbulous head into places that it didn’t belong.
As the rumor goes, it was because of Elliot Spitzer and the lobbying (read bribing) by this large casino operator that online gambling in the U.S. was banned. In the process they went after everyone, including the payment providers that enabled U.S. gamblers to collect and make payments online. Oh boy, did these guys get burned, some of whom are friends – and they all lost some big cash as a result (in the end it was merely a flesh wound, but still a significant amount of cash for most people).
Interesting that a few months ago Harrah’s hired one of the chief architects of Party Gaming, the world’s largest online casino operator.
Now why would Harrah’s hire a guy capable of building an online casino if they know that online gaming in the U.S. is illegal?
Is it because Barney Frank has a brain and under Barack Obama the government is likely to overturn the illegal decision that was ramrodded through the system? Perhaps it’s because the European Union has rightfully accused the U.S. of breaking international laws by banning online gambling and politely asked them to reverse this stupid decision. Maybe it’s because Barney Frank knows that the taxes that could be collected will far outweigh the costs of going after the individuals who make a few bucks playing Blackjack online. Or could it be because that shithead Elliot Spitzer has already embarrassed the U.S. enough as it is and it’s time to do the right thing.
I know of at least two books being written on the above subject. I think they will reveal much more.
It was at that point that I started researching and finding undervalued companies that I needed to invest in, and it was then that the speculation games began.
I had been searching for a company that’s based in the U.S., that trades publicly, and is associated with online gambling. WPTE (World Poker Tour) was my stock. I have been aggressively buying this stock; my average is now very close to $1. Recently they had some incredible news.
Follow along if you can; In a nutshell the company agreed to sell all their assets (except cash) to some no name company for 9 mil + a share of the revenue. Even though they’d end up with $1.40’ish in cash and a future revenue stream the investors didn’t like it and neither did their clientele (loyal poker players). The stock dropped down to .90.
It was at that point the company announced they received another offer. The stock jumped in anticipation… This offer is much better, first it’s from Party Gaming, and it’s roughly 12 mil cash + 5% of revenue + a guarantee of 3 mil revenues over the first couple of years. In other words they will have roughly $1.55 in cash, + a 5% revenue of a potentially booming business + another 3 mil in cash guaranteed.
So what would the booming business be? In a game of chess you must anticipate your opponents next 3 moves — or generally be a master of the game. In my mind the U.S. protectionist laws would still make it very difficult for a foreign company to introduce online gambling to U.S. consumers (once it becomes legal again). Party Gaming was burned huge by the ban and they have everything to gain for the U.S. to lift their illegal ban on online gambling.
So assuming Party Gaming does a deal with a U.S. company they will likely create a World Poker Tour branded gambling site for U.S. customers. This is huge news, in my opinion it will entitle WPTE to receive huge ongoing shared revenue…
Therefore, the next piece of the puzzle is for Barney Frank to get his ass in gear and legalize this thing that should have been never illegal in the first place. When that happens I expect this stock will do extremely well.
Of course this is just my opinion. What the fuck do I know? I am not suggesting you chase this thing down – if you can buy it for close to $1 it’s, as always, a pretty good gamble.
…but for now I like the cards I’m holding. ..as a wise man once said, you got to know when to hold ’em, know when to fold ’em, know when to walk away, and know when to run… great. now I have Kenny in my head.