By: Tomas Ronolski - AllPennyStocks.com News

Friday, December 13, 2013

In November New Jersey became the third state to legalize online gambling with real money, joining Nevada and Delaware to offer citizens the pleasure of placing bets from the comfort of their own homes. Indian tribes, which cumulatively run 460 facilities in 28 states, are aiming to get into the online gambling business. Tribes in several states, including California and Oklahoma, are planning to open new gambling websites in the near future. Akin to gamblers in New Jersey having to be citizens of the state to play, the Alturas Indian Tribe in California is employing a technology that ensures gamblers are “virtually” located on reservation property so that the betting falls within the law by being on sovereign Indian land. Smart move. Fact is that online gambling is big business, generating about $30 billion in revenue each year.

Matthews, North Carolina-based PokerTek, Inc. (Nasdaq:PTEK) is a licensed gaming company that develops and distributes electronic table games solutions for the gaming industry, including its PokerPro and ProCore platforms. The company has 2,442 gaming positions deployed, with clients including cruise ships and land-based casinos worldwide. Now the company is getting ready to go mobile through a new software licensing agreement with Las Vegas From Home.com Entertainment Inc. (TSX-Venture:LVH), or LVFH for short.

Per the deal, LVFH will provide PokerTek with LVFH’s new HTML5 mobile gaming system, a social and real-money gaming platform available for use on essentially all smartphones, tablets and computers. Gamers can play a variety of games on the system, such as blackjack, slot machines and roulette, to name a few. The cloud-based architecture of the system is fully scalable and can securely handle more than 250,000 concurrent users.

"Our customers are demanding mobile gaming as part of their electronic gaming strategies, and we are pleased to add LVFH's leading mobile gaming technology to our suite of products. We evaluated numerous platforms and technology providers and found LVFH to have the most complete, robust and player-friendly product in the industry," said James Crawford, PokerTek’s president, in a statement today released by LVFH.

As more organizations push the envelope to get into the online gambling space, the move to partner with LVFH could help earnings figures at PokerTek which are improving, but still in need of a jolt. In the third quarter, revenues rose by 2.6 percent from the year prior quarter to $1.1 million. Across the first nine months of 2013, sales were up about 8 percent at $4.1 million.

PokerTek runs a high-margin business, which means that expanding its offerings and reaching new horizontal markets through mobile initiatives could reap rewards. During the first three quarters this year, gross profit margins were 75 percent. Gross profit totaled $3.1 million, up 10.1 percent from January to September period in 2012.

Net loss improved by 22.5 percent to $513,000, or 6 cents per share, in the first three quarters of 2013, compared to the same period last year.

To kick-off the fourth quarter, PokerTek installed 60 PokerPro gaming positions at PokerStars LIVE Macau, adding to Macau's largest poker room to meet the growing interest and demand for poker in Asia. Investors will be attune to the momentum continuing to build at PokerTek and the impact of the initiative to pursue the lucrative and rapidly growing mobile market to see if it can swing into profitability in 2014 and what kind of aces it has up its sleeve. Proper due diligence is, as always, encouraged.

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