Shuffle Master reported strong performance in first quarter

Shuffle Master also announced a deal last month that would give it a foothold in the fast-growing online poker market. The company signed a pact to buy Ongame Network from bwin.party Services. It paid us$ 25.7 million cash, plus a possible additional us$ 13.2 million within five years, contingent on the legalization of real-money online poker games in the U.S.

Ongame, based in Stockholm, Sweden, is an online business-to-business poker network. It's one of the world's largest poker providers to online gaming operators. The acquisition could be a game changer for Shuffle Master, which leases, licenses and sells everything from card shufflers and chip sorters to slot machines and electronic versions of table games.

Overseas operators

It also licenses online versions of its popular titles to regulated online operators overseas. But Shuffle Master doesn't provide a poker platform, which is very complex and time-consuming to build, says spokeswoman Julia Boguslawski.

The intended purchase of Ongame comes would give Shuffle Master an immediate foothold in legalized online markets, says Boguslawski. "This provides us with a way to participate in the European iGaming market," he added. "Given our many licenses, the potentially larger opportunity for us is in the U.S., where we believe it's only a matter of time when, not if, online poker and other forms of online gaming are legalized."

Online gambling in all forms had been prohibited by the Wire Act of 1961, which forbids gambling via telecommunications across state lines. But a Justice Department opinion posted in December says the act applies only to sports betting.

Watchers say that has opened the door to legalized online gaming in the U.S. "The DOJ opinion allows states to consider offering various forms of Internet gaming without fear of violating federal law," said Roth Capital Partners analyst Todd Eilers.

Boguslawski says intrastate bills are moving forward. After the Justice's reinterpretation, the Nevada Gaming Commission approved regulations for intrastate online poker, becoming the first state in the U.S. to do so.

The regulations allowed for companies currently licensed by the state of Nevada to apply. Shuffle Master and IGT are among the companies that have applied for a license, she says.