If you live in the US you probably can’t get involved in online gambling directly (there are a few intra-state exceptions), but you can still take a line on the companies themselves. Gabelli analyst Camillo Schmidt-Chiari has initiated coverage on six online gambling stocks, all listed on the LSE, with an eye towards benefiting from the industries move to mobile gaming.

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Online gaming’s explosive growth flattening out

Online gaming is still just 8.9% of the global gambling industry by revenue, generating $40 billion of the $451 billion total in 2013, but that’s still a compound annual growth rate (CAGR) of 25% between 2000 and 2013. Schmidt-Chiari expects online gambling CAGR to slow to 5.7% through 2017, which still better than the global gambling industry’s projected 4.3%, but this average misses the big opportunity presented by mobile gaming.

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Gambling is transitioning to mobile

Unlike online gamblers, mobile gamblers are less likely to shop around for the best odds, and Schmidt-Chiari says that mobile operators have managed to get better margins and a higher average revenue per user (ARPU). There’s also a lot more interest from people who might not have been willing to gamble in the past. Gambling came into its own years ago with the World Series of Poker and other big events pulling it into the mainstream, but casual gaming is also a lot more acceptable, as the legions of adults with Candy Crush and Angry Birds on their smart phones can attest to. Micro-transactions, used to unlock features or buy small boosts in other games, are a perfect match for mobile bookies looking to make a large number of small bets.

The US market is mostly off limits after Department of Justice went after online gambling sites like PokerStars (recently acquired by Canadian-based Amaya Gaming), but intra-state online gambling is allowed in Nevada, New Jersey, and Delaware with certain restrictions, opening the door to local joint ventures.

Taken together, Schmidt-Chiari expects 36% CAGR in mobile gaming from the 2013 level of $2.9 billion, and the companies best positioned to take advantage of mobile will have the best returns over the next few years. Of the six stocks that Schmidt-Chiari has initiated coverage on (not all exclusively online) he rates Betfair Group Ltd (LON:BET) (OTCMKTS:BTFRF), Bwin.party Digital Entertainment Plc (LON:BPTY) (OTCMKTS:PYGMF) and William Hill plc (LON:WMH) (OTCMKTS:WIMHY) as Buys and rates Playtech PLC (LON:PTEC) (OTCMKTS:PYTCY), Rank Group PLC (LON:RNK) (OTCMKTS:RANKF), and Sportech plc (LON:SPO) as Holds.