| An SI Board Since May 1997 |
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BETM |
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Mark, One stock I like a lot as a speculation is American Wagering, stock symbol BETM. This is an interesting company that is basically a legal bookie in Nevada. It operates the Leroy's Horse and Sports Parlors, which are a nice, positive cash flow operation, but the key to an upside move on this one is a new venue of operation.
Betm will open, in partnership with International Game Technology (IGT), a group of pari-mutuel style sports betting units in Hilton's 9 Nevada hotels. Folks who are familiar with horse racing will recognize the betting where you walk up to the window and place your bet with a teller. However, horses are only part of the deal. A small part. Most sports will be betable and, even more interesting, events during events. If the game is a blow-out, do the Packers allow the Saints to score a touchdown in the third quarter? Does Oscar LaHoya take out his next opponent in less than five rounds, and if so, which round? This sort of betting ala mode can chalk up a lot of revenue.
Horses have never been popular in Nevada casinos, but other sports have. When participating hotels put on sporting events, the on-site betting parlors should do even a better.
Also, as a wild card, I see sports betting as having a lot more future to expand to other states than casino gambling. Since the sports already have regulators, the states do not have to set up huge new bureaucracies in order to steal taxes off the take. Also, every state already has boring football pools going on illegally, and this is a way for the govt. to get a chunk of that action. True, any move of this sort is probably way off into the future, but I see it as a real possibility.
Right now, Betm is operating at a small loss. I expect that to turn around once the Hilton stores are up and running. The stock closed today at 11 1/4, a bit more than half way up in its annual trading range. I have purchased my first third of this stock and will buy more under $10, assuming nothing fundamental changes.
Good Luck, MB
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