The lesson of the last five years is that grey markets are most profitable…


Betfair has become the biggest internet gambling company listed on a Stock Exchange. 


Betfair is also the 17th largest company in the GBGC global index of all listed gambling companies, with a market cap of US$3.8 billion.
Since 2010 the big winner is Net Entertainment, which is listed in Stockholm. The casino software company has seen its value increase from US$ 467m to US$ 1,531m – a staggering 228% improvement. Playtech, by comparison, is up 90% over the same period. Betfair is up 104% in just over twelve months.
Internet gambling companies have increased their market capitalisation by 20% since January 2015. The share prices being driven by wider use of smart devices for gambling, in-play betting and regulated markets which enhance the quality of earnings.
 
GBGC iGBGC gambling index June 2015
Amaya takes second place after buying the world’s largest poker site Poker Stars, just nudging ahead of Playtech, the internet gambling software provider.
Just five years ago PartyGaming, with a market cap ofUS$1.98 billion, was ranked first with Bwin Interactive Entertainment in third place with a market cap of US$1.94 billion. They merged and were listed on the LSE in March 2011with a combined market cap of US$ 4 billion but today that has fallen to just US$ 1.3 billion. An investor buying on 1 July 2010 and selling on 1 June 2015 would have lost 67% of their capital. 

What can we learn from this?

• Big mergers can create big integration problems and while they are being solved the market has quickly moved on to such an extent that all the gains that were planned through removing dual costs seem immaterial. 
• Grey markets are the most profitable
• Software providers have proved to be the best investment