This is a message that I just posted in SBET:
After doing a fair bit of research into this sector, I have come up with the following. 1)
These gambling sites will do very well. 2) A company such as SBET doesn't need huge
amounts of capital to create a profitable business. 3) most casinos operate at a gross
margin of about 12% with huge overhead and are very profitable, a Web site inherently
has much less overhead and the same gross margins. 4) The federal government will
not take any action until 1998 if they decide to take any. They have created a
congressional panal to look at gambling and gambling over the internet but will not
release their findings for two years. 5) Individual States, Minnesota especially, will try
and ban these sites, but I'm not sure they have the power except to prosecute users of
the sites and that's not going to happen. 6) The governments where these sites are
being set up are very excited because they generally tax the companies about 10% of
net profits and charge 50-100K liscensing fees to set up a casino on-line. For the
majority of these countries, such as the Turks & Cacos, it will be their number 1
source of revenue going forward. 7) There will be a lot of competition on the Internet,
but casino gambling is a $40 billion dollar business in the US alone and casinos must
import players to achieve those numbers. Now, one doesn't have to travel to go to a
casino and these sites can recruite players from the entire world. I estimate there will
be 10-20 of these on-line sites, and the ones set up well that are easy to use,
entertaining, aside from the gambling, and build a "community" feeling around the site
will do the best. 8) Some of these companies will not have the capital to back a lot of
bets, and if the odds play agaist them for a while (ie... the Jets upset the Packers) they
may go out of biz and gamblers will be left holding their &%$*#!# s. 9) Sites with
different language and graphical interfaces will do the most business. The sites that
"Americanize" will do the worst in the long run. 10) The sites that have a Web interface
with no software to download or the ones that give you an option will also factor into
the ones that succeed.
All in all, I feel it's a good bet, but diversify amongst these players. I'm a holder of
SBET and GLOW and they only make up 30% of my speculative money (money I can
afford to lose). It seems as if January-February is the time when a lot of these sites will
go live, although there are quite a few that are doing business now. Check out Yahoo
under internet casino/gambling for a good list. I won $100 on a site called Fallon's but
now their software doesn't work! They assure me they're not a scam.
Any feedback would be great. |
