New Jersey became the third U.S. state to legalize online gambling in February, joining Nevada and Delaware. The legalization has the potential to open up a new, huge market for gambling firms, and according to analysts Europeans look set to gain.
Chris Christie, governor of New Jersey, signed a bill last month allowing Internet poker and casino operations after several years of restrictions imposed by the Unlawful Internet Gambling Enforcement Act of 2006.
The turnaround for the U.S. gambling sector has been big news for European firms, who have recently announced a series of tie-ins and partnerships with the U.S. market in mind.
"The potential for the U.S. gaming market is huge," a spokesperson for Gibraltar-based online gambling company 888 Holdings told CNBC.com.
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"888 is able to offer bricks and mortar casinos with the perfect platform to launch their brand online, once all regulations are in place."
888 became the first non-U.S. operator to be recommended by the Nevada Gaming Control Board to the Nevada Gaming Commission for the approval of an interactive gaming license, and prior to being given the boot in 2006, around half of its total revenue was from the United States.
Deals with U.S-based gambling firms Caesars, WMS gaming and Avenue Capital have all been announced by 888 Holdings, which hopes that the deals will open the door to more business in the U.S.
Fellow European gambling firm bwin.party has a partnership with MGM and Boyd Gaming from the United States and U.K.-based William Hill has also dipped its toes into the prospective market with a deal to buy out Playtech, its joint venture partner, and a 460 million pound ($695 million) joint takeover of Sportingbet.
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Shares of 888 Holdings hit their all-time high in April 2006 at 240 pence but fell below 30 pence during the European debt crisis of 2011. The stock has now bounced back, currently at 160 pence a share. Panmure Research sees limited upside in the near term but is telling investors to hold on to the stock.
"The group is well positioned in the U.S." it said in a research note. Panmure is more bullish on bwin.party which it says is trading lower than the sector average based on enterprise value/EBITDA (earnings before interest, taxes, depreciation and amortization).
It maintains its "buy" rating on the stock and sees its price rising to 176 pence from its current price of near 150 pence a share, implying an approximate 16 percent potential upside.
"Although Nevada and Delaware have both passed online gaming regulation, (New Jersey) is a key state given its size and the fact that it has permitted casino as well as poker. California will probably be the most important state to watch in the medium term although we don't expect regulation to be passed before (year-end 2014). Seven other states also have ongoing draft regulation," Citi wrote in a research note after news of Governor Christie signing the bill.
Citi said that New Jersey is worth 6 percent of the earnings per share of bwin.party in a state of which the size and relative affluence suggest it could be a 320 million euro ($414 million) market in its first year. Crucially, however Citi said the expansion in the U.S. is already priced into its shares.
"We expect other states to eventually follow (New Jersey) resulting in a patchwork of regulatory frameworks (like Europe). Our bottom-up analysis suggests that the U.S. market could be worth 7.9 billion euros by (year-end 2018). We think bwin.party can capture (approximately) 15 percent market share which with margins of c.15-20 percent would be worth 53 (pence)," it said.
—By CNBC.com's Matt Clinch