Cantor Entertainment bets on IPO
The innovative mobile gaming company has room to run.
Cantor Fitzgerald has been at the cutting edge of innovation in the financial industry, especially with electronic bond trading. The company owns more than 250 U.S. and foreign patents on real-time, secure technology systems.
However, the company's technology turned out to be useful in other applications -- specifically, online gambling. Back in 2006, Cantor built a new company -- Cantor Entertainment Technology -- to pursue this goal, and it recently filed to go public.
CET provides the technology infrastructure for race and sports book operations in Nevada, covering horse races, football, basketball, baseball and hockey. The advanced system even allows for "in-running gaming" -- that is, a patron can place bets while the event is happening. A pretty innovative way to create even more gambling excitement -- and to boost revenue.
The company should have opportunities to expand the business beyond Nevada as more states adopt gambling, not to mention potential growth through casinos in the country's numerous American Indian reservations.
But perhaps the most interesting part of CET is its mobile business. A casino patron doesn't have to wait in line -- he or she can place a bet in a hotel room, pool, lobby, bar, restaurant and so on. Again, it's a smart way to boost incremental revenue.
CET has an assortment of traditional games, such as video poker, table games and slots. But it also has proprietary offerings. For example, some of CET's titles involve aggregate outcomes, allowing betting on a series of games and making it possible to wager on scenarios such as whether there will be more blacks than reds on all roulette wheels in the casino.
CET is the only company approved for mobile gaming in Nevada. By early next year, it should have coverage in more than 15,000 hotel rooms at places like the M Resort, the Cosmopolitan of Las Vegas, the Tropicana Las Vegas, the Hard Rock Hotel & Casino and Palms Casino Resort, as well as Las Vegas Sands' (LVS) The Venetian and The Palazzo.
Keep in mind that CET still is a fairly small company. For the first nine months of 2011, revenue came to $7.7 million, up from $4.6 million in the same period a year ago. The company also suffered an operating loss of $16.6 million.
Yet CET's market is poised for tremendous growth. According to Juniper Research, the mobile gambling market is expected to hit a whopping $48 billion by 2015. And in light of CET's technology infrastructure, it should be a big player.
Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. As of this writing, he did not own a position in any of the aforementioned stocks.
Cantor Gaming will be added to the Mobile Gaming IndexTM.
Mobile Gaming IndexTM
The Mobile Gaming IndexTM for 22 December 2011 was £7.39
Symbol Price (GBP default)
The Mobile Gaming IndexTM is a currency-adjusted, average stock price of public companies
in the mobile gaming sector.
The price is weighted by shares outstanding, and by an estimated mobile revenue ratio.
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John Stumpf acknowledges that growth has been slow, but he says he's still optimistic.
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