Company Is Strengthening Its Hand in Online Poker

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Don't think that casino giants are the only businesses thinking about the potential profit bonanza from online gaming. Sure, MGM Resorts (NYS: MGM) , Boyd Gaming (NYS: BYD) , and Caesars Entertainment (NAS: CZR) have a lot riding on online poker's potential legalization in the U.S., but there are suppliers who are chomping at the bit as well.

Shuffle Master (NAS: SHFL) has its sights set on being a major supplier in the online gaming business. The company is already able to offer proprietary games to potential online companies, but it made a move yesterday that may allow the company to expand into online poker.

The company announced it was acquiring Ongame, a company with a platform to provide online gaming capabilities across multiple devices, from bwin.party. This will allow Shuffle Master to offer a host of services to online gaming operators, including poker and proprietary games on mobile devices.

Proof is in the pudding
Shuffle Master is becoming more confident and capable of making these moves because of its own financial success. The company just reported a 28% increase in fiscal first-quarter revenue, to $56.1 million, and earnings per share of $0.14.

This followed strong earnings from competitor Bally Technologies (NYS: BYI) , which also supplies casinos with games and shows nice momentum in the industry. With gaming expanding throughout the world and casinos fighting for customers, suppliers should be sitting in a strong competitive position.

Foolish bottom line
These moves will allow Shuffle Master to capture business in the online gaming space (where it's legal) and build a base of customers in anticipation of U.S. regulation. Bwin.party is one of the leaders in the online gaming space and Ongame has developed products for its platform. I expect this acquisition, as well as Shuffle Master's proprietary games, to continue to drive their growth beyond the casino floor. 

I'm adding an outperform CAPScall on My CAPS page as a result of the positive news today.

Interested in reading more about Shuffle Master? Click here to add it to MyWatchlist, and it will find all of our Foolish analysis on this stock.

At the time this article was published Fool contributorTravis Hoiumdoes not have a position in any company mentioned. You can follow Travis on Twitter at@FlushDrawFool, check out hispersonal stock holdingsor follow his CAPS picks atTMFFlushDraw.Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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