Online casino gaming brings billionaires to the mat

Internet gambling is shaping up as the “Battle of the Behemoths,” now that information regarding major investments by well-known hedge fund operators has been made public.
In a piece for Forbes on Monday, Nathan Vardi identified billionaires George Soros, John Paulson and Leon Cooperman, known in the financial world as three of the most successful investors, as having “quietly participated in a rights offering” last year in Caesars Acquisition, Co. (CACQ), the spinoff of properties owned by Caesars Entertainment Corp. (CZR).
Caesars Acquisition also owns portions of Planet Hollywood on the Las Vegas Strip and the casinos being built by Caesars Entertainment in Baltimore but has a major focus on online gambling through Caesars Interactive and the World Series of Poker.
As Vardi describes it, the Soros, Paulson, Cooperman investments put them in direct competition with billionaire Sheldon Adelson, founder, chairman and CEO of Las Vegas Sands Corp. (LVS). Adelson has vowed to “spend whatever it takes” to stop the growth of online gambling in the country.
Currently, a full slate of online gambling is offered in Delaware and New Jersey, and online poker is available in Nevada. But, in each instance, the states require the participants be physically within the state’s borders.
Other major investors have joined the fray, according to Vardi. They include private equity managers Leon Black, David Bonderman, Marc Rowan and Joshua Harris, as well as Kirk Kerkorian, the largest single stockholder in MGM Resorts International (MGM).
There was no indication as to why the investments of such high-profile Wall Street figures were not publicly reported before the Forbes article.
But certainly the investments, so far, have been profitable with shares in CACQ moving from $10.34 to a high of $12.32. CZR shares had dipped as low as $7 each, prior to a resurgence in interest that pushed it to a 52-week high of $26.57 per share.
Battling for the attention of Congress are some political heavyweights on both sides of the issue. When the movement toward legalization of online gaming began, one of the principal voices in favor was ex-Sen. Al D’Amato, who used his celebrity to support the cause in numerous visits to popular television talk shows.
More recently, Adelson has hired two heavyweights to spread the word against online gambling. They are George Pataki, the popular former New York governor, and ex-Sen. Blanche Lincoln of Arkansas. They were joined by former Denver mayor Wellington Webb.
Based on share price popularity, the pro movement seems to be winning but the battle is far from over.
As Vardi pointed out, Adelson’s billions give him an ample opportunity to keep up the battle but his opponents are loaded, as well.

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