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No one could deny that gaming is big business with many investors keen to get in on the action by buying shares in the four or five big companies that lead the market. Having said this, it’s an extremely competitive and volatile one too and many of the biggest players in recent years have arranged mergers in order to secure their positions.
For example in 2015 Betfair and Paddy Power joined forces to become one of the biggest in the field with a market value of almost £7,200 million and, in November of last year, Ladbrokes and Coral joined forces to create a business worth a rather more modest £2,500 million.
Standing firm and holding out against merger proposals is William Hill which last year rejected the advances of a partnership between Rank and 888 Holdings on the grounds that, despite an offer of almost £4 a share, the company was being under-valued.
This was a disappointment, particularly to 888 Holdings, owners of the successful online casino who are said to still be on the lookout for merger opportunities in the future.
888 was originally founded in 1997, reportedly after one of its original directors had a moment of revelation while at an event in Monte Carlo that online gaming was where the future lay for the industry. Within a few years this was proving to be the case and the company has had a generally excellent record since then.
One blow which has struck them in the past was in 2006 when the US Government enacted the Unlawful Internet Gambling Enforcement Act effectively preventing US citizens from playing online and seriously denting the potential for companies like 888 to prosper in the potentially very lucrative US market.
Naturally this hit the share price of 888 hard and in 2007 it was as low as 100p before rallying slightly in 2008 to reach a high of around 150p in the middle of the year.
However there was worse to come as the whole of the western world saw a widescale crash of the economy which first hit in 2008 and reached the depths of its fall in 2012. At their very worst, shares in 888 holdings slumped to less than 30p in late 2011. But as economies slowly started to recover, so did the 888 share price, also fired by the innovative and forward-thinking way the company was developing new products, acquiring companies, creating new sub-brands like the retro-themed 777 Casino and moving into new markets such as Spain.
As a result the share price of the company has been on the up and up in the last five years, reaching a peak 0f 237p in 2016 and holding steady above 200p into 2017 so far.
The prospects are also good with the predicted economic fallout of the Brexit vote in the UK not seeming to have materialised. All eyes are also on America to see if the gambling-fan President Trump might take a more liberal approach to the online gaming industry that had been effectively outlawed eleven years ago.
If he does this could be the next great leap forward for 888 and its investors.
This content was written by Ian Rushworth and is published in accordance with our disclosure policy on Advfn.com
