I do not own casino shares (In fact, no shares at all since the Lernhout&Hauspie fiasco).
Besides the fact that it is a year too late now to get all the growth, I see four reasons not to invest in casino shares:
1. One day, offline casinos with extremely strong brands (MGM Grant, …) will be allowed to enter the market. I think they will dominate the market immediately and it is a threath to online-only casinos.
2. The already mentionned potential US Internet Gambling Ban. It seems sense to me (from a Las Vegas lobby and US government point of view) that US gambling will be banned or ‘unfacilitated’ (how do you say that?) untill Las Vegas casino’s take over the online business.
3. 888.com: unethical but on the stock exchange. The negative image 888 can (will?) give to all the online casino’s out there on the stock exchanges could be big. Again, if I was part of the Bush Administration, I would love this situation; another reason to ban it all and let the Las Vegas buddies do it.
4. Diversification… If already a casino affiliate, why keep on investing in this business… your facing the same beta (measure of risk). Diversify… By the way, simply buy trackers of a world index, they go up 7% historically and it 95% of hedge funds do not succeed to beat such world tracker each year. Over a decade, almost none of the so called gurus will beat the market. That’s simply a financial fact, not just my opinion.
Anyway, good luck with your investments!