Gaming VC is no stranger to this newsletter. I tipped the shares in October 2005 at 403.5p, missed the chance to take readers out at a decent profit, but rightly advised cutting and running last July at 304p. The shares have since been down to 72p as Gaming VC has been caught up in the fall-out from the collapse of US-oriented online gaming and faced questions about the future of its own European operations, which are centred on Germany.

But on Friday, Gaming VC’s shares jumped to 93p as the company announced the arrival of a new chief executive – Kenny Alexander, who has come in from Sportingbet – and some encouraging numbers for the fourth quarter of 2006. That got some investors looking at the dividend again. Gaming VC paid a 13p dividend at the half-way stage. If, as I believe it will, it also pays a final of the same amount, the shares are on a yield of 28 per cent.

Now Gaming VC is clearly not for the faint-hearted. But if that dividend is held there is huge upside.

The business runs online casino and poker sites aimed in the main at the German-speaking parts of Europe. After a variety of problems centred on marketing (or the lack of it) in the second half of 2005 it has seen a pick-up in new registrations on its sites and good levels of revenue. In the final quarter of last year, it was generating daily revenue of around £70,000. In the first half it earned about 14p a share after tax. On a similar outturn for the second half, a 13p final dividend looks just about affordable.

Gaming VC has no US-facing operations and has sidestepped the problems most other online gaming businesses have suffered. But it does face a challenge in Germany, where a new treaty on gambling – which would effectively ban remote gaming – is being discussed by all regional state parliaments. However, in December, 15 of the 16 Bundesländer premiers postponed signing the treaty. The reason is that the European Union’s advocate-general has recently challenged the validity of restrictive national legislation in this area as contrary to single market principles.

If the threat to its German business evaporates, Gaming VC will almost certainly be bid for. After the closure of the US market, many online gaming firms are keen to expand in Europe and Gaming VC has parts of the continent sewn up. In December it confirmed rumours that it was in talks that could lead to a bid. Now, any bid will have to be pitched at well above current levels to have any chance of success.

Gaming VC is a speculative counter and not for widows and orphans, and there is a depressingly wide spread in the shares (88p to 98p at the time of writing). But if you can afford a modest flutter on a six-month view, pick up some the right side of £1.

Gaming VC Holdings	AIM	£36.58m	117.50p	0.00p
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Other company articles:
Gaming VC			11/07/2008
AIM news			28/04/2008
Gaming VC on 17pc yield			28/09/2007
Gaming VC pays 13p final dividend			20/04/2007
Gaming VC a winner from EC ruling			09/03/2007