Investors Skeptical About Online Gambling Industry

Lawmakers in New Jersey, Delaware and Nevada predicted that online gambling would be a booming industry in their states. The industry has grown more slowly than they predicted, but they are confident that it will still be highly profitable in the years to come. However, the financial community appears to be more pessimistic.

A recent report from the Motley Fool shows that investors haven't shown much interest in legalizing online gambling. Nevada is the leader of the United States gambling industry, but investors in the state have shown surprisingly little interest in online gambling.

The report also showed little correlation between online gambling revenues and casino stock prices. Caesars Entertainment is currently leading the market in New Jersey, but its stock price has only increased 15% since 2012. On the other hand, Wynn Resorts stock price has surged 70% in the same timeframe. Wynn doesn't offer any form of online gambling.

The Motley Fool suggested that the gaming industry may be investing in a vertical that won't offer a strong ROI. However, the argument is premature, because the industry is still in its infancy. Only three states have legalized online gambling and federal lawmakers are still debating whether or not to promote a federal bill. The first interstate gaming compact is expected to go into effect later this summer.

The industry has faced a few setbacks, but has still maintained modest growth. Industry leaders and lawmakers in New Jersey feel that the revenues will increase more after issues with payment processing and geolocation services are resolved. However, investors are unlikely to bet on online gambling until profitability improves and more states legalize it.