TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.
The Indian gaming industry has seen tremendous growth opportunities over the last decade, but very few options were available to public investors. One new such opportunity is Bingo Nation (BLTO).
While basically in start-up mode, Bingo Nation has gotten a lot of media attention for an innovative new bingo related game. The question now is whether the company can crack the opportunity in the large Indian gaming sector?
Huge Indian Gaming Market
Back in 2014, the Indian gaming market was estimated at $28.9 billion concluding a fifth consecutive year of growth. The Indian casinos only accounted for 28% of the casino industry revenues that amounted to a massive $103.2 billion. The largest revenue share belongs to commercial casinos at $48.3 billion with another 27% or $27.9 million captured by lotteries. The industry has rebounded strong from the financial crisis lows where gambling revenues declined to $86.7 million.
The Indian Gaming Regulatory Act of 1988 (IGRA) gave state governments authority over tribal gaming requiring the negotiations agreements with states for Class III casino-style gaming activities. Previously, some states allowed minor levels of gambling on reservation lands such as bingo and other tribal related games.
In essence, the IGRA gave Indian tribes the rights to operate casinos with the goal of using the revenues to fund tribal government programs, provide for the general welfare of tribe members such as healthcare, and promote economic development within the tribes. In many states, the Indian casinos provided the only options for legal gambling.
Most of the tribal casinos have now become destinations with connected luxury hotels, golf courses and spas. A lot of the Indian casinos have expanded into entertainment facilities in attempt to replicate the amenities that attracted consumers to Las Vegas. The Indian casinos offer more affordable day trips or nights out for adults in many states.
The IGRA established three classifications of Indian gaming. Bingo Nation is targeting the Class II market that is assigned to bingo and pull tab games.
Bingo Nation Game
Bingo Nation provides a direct Indian gaming play not available with traditional casino and gaming stocks. The stock has a minimal market cap so high risks exist in this play. The company must still prove that operating the game is feasible and will produce rewards for shareholders.
The company offers the potential for a wide-area Class II bingo game that interacts with a new live television game show. Bingo Nation offers Indian tribes the opportunity to participate in the entertainment experience by hosting self-service kiosks in licensed facilities on Indian lands. Players purchase game cards to participate in the weekly interactive show with the potential of winning a lottery type payout due to the participation of multiple tribes around the country. The tribes participate in revenues based on the gross sales with the hopes of attracting gamblers to the large payouts and interactive nature of the TV show.
In essence, Bingo Nation hopes to participate in the combined areas where 55% of current gambling revenues go towards either Indian casinos or lotteries. The game is designed to attract players similar to the excitement over the big Powerball drawings.
Despite start-up status, San Diego 6 news covered how legendary Hollywood television show and sports legends like Bob Eubanks, Peter Marshall, Chuck Woolery, and Steve Garvey unveiled the new TV game show at a previous industry convention.
Bingo Nation is working on new Android and iOS apps to help promote the bingo show and bring more attention to tribal casinos where the real player cards can be purchased. The company expects those apps to be released soon.
While Bingo Nation has an interesting product with well established spokesmen, the company still has a limited proven operational track record. The current financials show no revenues and Bingo Nation likely need to raise funds typical of a small startup. While normal for a micro cap developing a new niche, it also highlights the risks in the stock. No guarantee exists that consumers will prefer the interactive television show or prefer traveling to the limited casino locations as opposed to playing a traditional lottery typically available at more locations closer to home or work. As well, the company will have to attract multiple Indian tribes to participate in the weekly show to produce the large payouts.
Investors will no doubt face the likelihood that Bingo Nation raises funds in an equity offering though such a move would be welcomed to fund development of this concept. The investment story becomes significantly more interesting with adequate funds to promote the TV show to consumers and market the participation in the kiosks to Indian casinos. Beyond those steps, the company will need to prove that a successful gambling themed show can generate profits.
Takeaway
The key investor takeaway is that Bingo Nation offers a unique opportunity to play the growing Indian nation gambling sector. Direct exposure to the sector was traditionally impossible to obtain. The company has a decent opportunity to garner success with big Hollywood names involved in the promotion of the TV show.
Ultimately though, risk is high in this stock and investors should only allocate risk capital in a diversified portfolio that one is willing to lose.
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