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TheStreet Open House

New Jersey Approves Online Gambling: 3 Stocks to Benefit

Stocks in this article: ZNGA CZR BYD MGM

NEW YORK ( TheStreet) -- New Jersey became the second state to approve online gambling, with Gov. Chris Christie approving a bill this week. Companies like Zynga (ZNGA - Get Report), Caesars Entertainment (CZR - Get Report) and Boyd Gaming (BYD - Get Report) may stand to benefit.

In a statement, Christie said the decision was critical, and "one that I did not make lightly." The Governor had previously vetoed a bill on online gambling, but signaled that he would approve it with some recommended changes. Christie asked for a time limit, a tax-rate increase, and additional money set aside for compulsive-gambling programs.

Last week, Nevada became the first state in the nation to approve online gambling, as Gov. Brian Sandoval signed legislation after the Nevada State Senate and Assembly approved the bill.

Zynga may stand to benefit, due in large part to its popular Texas Hold 'Em app, Zynga Poker. Last June, Zynga Poker had 30 million monthly average users, according to Mike Gupta, the company's then treasurer and vice president of finance. Gupta also told TheStreet that online gambling was on the company's radar. "It is something we're exploring," he said. "We think it's an interesting adjacency to what we do in our core business."

Traditional casino operators will stand to benefit, some more so than others, says Credit Suisse analyst Joel Simkins. Simkins cited Boyd Gaming and Caesar's Entertainment as two names that would be beneficiaries. "Depending on how its sliced, online gaming in NJ could be a $250m-$500m market and while we believe both companies have the capabilities (in-house or through partnerships) to implement platforms quickly, competition could be high, with margins at more modest levels initially," Simkins wrote in a Feb. 7 research note.

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