London - Shares of UK companies that own online gambling sites had soared this year on speculation of mergers and acquisitions and the profit potential of online poker, said Dresdner Bank analyst Andrew Lee.
The businesses were "hugely cash-generative in an explosive growth market", said Lee. "The market is finally rerating them to reflect their organic and acquisitive growth prospects."
The internet poker market is worth $1.5 billion (R9.3 billion), according to Sportingbet, which in October bought Paradise Poker, the biggest provider of poker sites on the Web, for $297.5 million.
The stock has surged 88 percent since then. Shares of Gaming Corporation, the owner of Playcasino.co.uk, have more than doubled this year.
Companies that operated online casino sites were benefiting from increased traffic and the average rake, analysts said.
The casinos charge a rake, or percentage of the profit, every time a customer wins. Poker is even more profitable because companies take a percentage of every transaction.
There was "incredibly good growth potential coming from poker", said analyst Paul Leyland.
About 4 percent of British adults who have access to the internet have gambled online in the past two years, according to figures published by the Gaming Board for Great Britain, which regulates UK casinos.
PartyGaming, a privately held online casino and poker operator, might buy an online betting or gaming site, said Leyland.
PartyGaming "will almost certainly want to increase the products in its portfolio".
Online gambling companies also generate revenue from advertisements on their websites on a cost-per-click model. Every time a person clicks on an advertisement, the website earns a fee from the advertiser.