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Online Gambling Exec Bets on Legalization

Tuesday, 6 Dec 2011 | 1:17 PM ET

As states grapple with shrinking revenues, online gambling stands to reap a jackpot, an industry executive said Tuesday on “Fast Money.”

Richard “Skip” Bronson, chairman of U.S. Digital Gaming, said that it was a sector that needs to be taxed and regulated, as illegal offshore operators have taken up to $6 billion of revenue out of the United States.

“It’s imminent. There’s no question,” he said. “The states are broke. They’re looking for revenue sources.”

Online Gambling Legal Soon?
Should you preparing for a game-changer in online gambling? Richard Branson, chairman of U.S. Digital Gaming, discusses what's next for the space, with the Fast Money team. Robin Farley, gaming analyst at UBS, also weighs in.

U.S. Digital Gaming develops “legally compliant” gambling systems for Native American tribes, state lotteries and existing casinos. Bronson said already eight or nine states have laws pending to legalize gambling.

“We think it’ll be like the first lottery, which occurred in New Hampshire in 1964. Now there are 43 states that have a state lottery,” he said. “We believe the same thing will happen with online gaming.”

Billionaire businessman and 2929 Entertainment CEO Todd Wagner said it was likely online gambling would move in some form over to an online arena.

“Will it just be the same brick-and-mortar player than transition to this, or will there be room for others to come in because the business is different?” he said. “It’s not just constructing a facility and construction permits and all the things that go with that world. Now we’re on an online world.”

Trader Joe Terranova said that within the gambling industry, one stock stood to gain: International Game Technology.

“They make those machines,” he said.

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Trader disclosure: On Dec. 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Cortes is long Treasuries; Cortes is long TSN; Cortes is long K; Cortes is short AAPL; Cortes is short EUR; Cortes is short MXN; Cortes is short GBP; Cortes is short AUD; Cortes is short XRT vs. S&P long; Terranova is long EMC; Terranova is long SU; Terranova is long NCR; Terranova is long UPC; Terranova is long TRLG; Terranova is long VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long AXP; Terranova is long IBM; Terranova is long HES; Terranova is long CAT; Terranova is long SWN; Terranova is long CNI; Terranova is long DECK; Terranova is long SBUX;

Lou Kerner
Owns Facebook shares

Tony Wible
Netflix (NFLX): I, Tony Wible, the Primarily Responsible Analyst for this research report, hereby certify that all of the views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers. No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views I expressed in this research report on.

Robin Farley
1. UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of the following companies' common equity securities as of last month`s end (or the prior month`s end if this report is dated less than 10 days after the most recent month`s end): MGM Resorts International, Wynn Resorts

2. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.: International Game Technology, Las Vegas Sands, MGM Resorts International, Wynn Resorts

3. Within the past 12 months, UBS Securities LLC has received compensation from this company/entity: International Game Technology, Las Vegas Sands, MGM Resorts International, Wynn Resorts

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IAU
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