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Is the gaming industry about to take off?

As share markets from Australia to the UK are once again gaining traction, slowly more pockets on the street are starting to jingle with the sound of loose change and the quiet rustle of spare cash.

The S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is up a staggering 15% on this time last year, while the Dow Jones Industry Average (Index^ DJX) is up a neat 12%. Even if the momentum slows, there will be more people looking to splash some cash – and that could fuel increased revenues for the gaming and casino industry.

Several of the big names behind some of the biggest casino groups can sense it too and are on the prowl to expand their empires. Malaysian billionaire KT Lim, CEO of casino and resort conglomerate Genting Group, is one of the players out to increase his stake in Echo Entertainment Group (ASX: EGP) from 5.2% to 25% according to reports.

Lim was caught taking a flying visit into Sydney for a meeting with the NSW Independent Liquor and Gaming Authority to request permission for the deal. According to the Business Spectator fellow billionaire and Crown Limited (ASX: CWN) Chairman James Packer is also trying to increase his stake in Echo from 10% to 25% in a battle to determine the future direction of the company.

Packer has also been working on expanding Crown’s gaming empire into Sri Lanka. No site has yet been selected, but it has been reported Packer has made several visits to meet with local government and potential investors.

Crown could be looking to set up a new joint venture similar to the company’s venture into Macau through Melco-Crown Entertainment which developed the City of Dreams casino complex. Sri Lanka would open Crown up to the growing wealth of India which, similar to China, has very restrictive anti-gambling laws across the region.

Foolish takeaway

Billionaires obviously have a lot more money at their disposal than the average investor and many are also known to enjoy a gamble, so taking risks on new casinos is to be expected.  However Crown also has a history of making investments in casinos that have subsequently lost money.

Every-day investors who are more risk averse may instead consider companies that may benefit from a jump in industry activity such as Aristocrat Leisure (ASX: ALL) or Ainsworth Game Technology (ASX: AGI).

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned in this article.

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