KUALA LUMPUR (Dec 19): Berjaya Sports Toto Bhd (BToto) could be significantly affected by the intensive competition of illegal online gaming sites, unless there is an update on the gaming laws to curb illegal operators, said analysts.

CIMB Research analyst Kristine Wong wrote in her note today the presently outdated Common Gaming Houses Act 1953 has not taken into account the evolution of gaming, where it has shifted to more advanced and unconventional channels, making it challenging for law enforcers to clamp down on online casinos and gambling operators.

"Should the explicit banning of illegal online gaming materialise in an amendment of gaming bill in the near future, it could serve as a re-rating catalyst for the overall NFO (number forecast operator) industry and potentially eliminate unregulated online syndicates," said Wong, adding that it could bring back market share to legal betting operators like BToto.

Meanwhile, AllianceDBS Research vice president for equity research Cheah King Yoong concurred with the sentiment, saying that other than the weak consumer sentiment, competition from illegal NFOs continues to weigh on the growth prospects of the sector.

"We understand that competition from illegal NFOs has intensified since last year with some illegal NFOs willing to increase the prize payout up to 85%," he said.

Cheah maintained his hold rating on the stock with a target price of RM2.40, while Wong maintained her add call with a target price of RM2.85.

"In spite of the murky outlook for the overall NFO sector amid an intensive competitive environment, we think investors seeking for a defensive yield play should continue to find Berjaya Sports Toto attractive," said Wong.

As of 10.27am, BToto dipped 1 sen or 0.44% to RM2.27, after 317,600 shares changed hands.