The United States Supreme Court has repealed the law which prohibits sports betting in all but a handful of states in a move which could lead to a potentially huge market opening up for UK and Irish gambling operators.
Shares in William Hill, Paddy Power Betfair and GVC Holdings, who all have a toehold in the market, rose steeply on the back of the news, which Hills’ chief executive Philip Bowcock described as a landmark decision for both sports betting and his firm.
Last December the court heard the state of New Jersey’s challenge to the Professional and Amateur Sports Protection Act (PASPA), which limits sports betting in the US to four states, although only Nevada allows bets to be placed on single matches.
It has been estimated that Americans place up to $150 billion a year in illegal sports bets, and around 20 states have already set out on the road to sports betting legislation.
There is a potentially huge sports betting market in the US
In its judgement, the Supreme Court said: “Congress can regulate sports gambling directly but, if it elects not to do so, each state is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the constitution. PASPA is not.”
By close of trading on Monday Hills shares were up 10.7 per cent on Friday’s close at 313.1p, while Paddy Power Betfair were up more than 12 per cent at 7,975p and GVC Holdings up more than seven per cent at 940p.
Shares in 888 Holdings soared by more than 15 per cent to 312p, while Nasdaq-listed The Stars Group, who are set to buy Sky Bet, were up by more than 11 per cent.
Hills have said they are increasingly focusing on the opportunity in the US, where they have a well-established presence in Nevada as well as a partnership with Monmouth Park racecourse in New Jersey.
The news also comes as filip to the firm given the expectation that the UK government is set to cut FOBT stakes to £2 from £100.
Bowcock said: “This is a landmark moment for sports betting and for William Hill. Now, all attention shifts to the States, where steps have already been taken to prepare for this day.
“Legalised sports betting means consumers and sports leagues will have greater protection, states will benefit from the raising of taxes, and there is the potential for over 100,000 jobs to be created.
“We welcome the ruling and expect to be operational in New Jersey as soon as responsibly possible. We are also actively working on opportunities in a number of other states and will update on these opportunities as appropriate.”
A statement from Paddy Power Betfair read: “We welcome the Supreme Court’s decision, which sets out a path towards an exciting regulated sports betting market in the US. Paddy Power Betfair is well placed to take advantage of this opportunity through our existing US operations, and the group’s wider resources and capabilities.”
One of the first firms to react was betting exchange Smarkets, who are applying for a licence in New Jersey and West Virginia, with the intention of partnering with land-based casinos in those states.
Smarkets chief executive Jason Trost said: “This is a landmark moment for the US, which ends the failed 25-year ban on sports wagering. While this is a huge victory for the sports betting industry and for consumers, there is a lot of work left to be done at the state legislative level.
“Smarkets, in conjunction with the American Gaming Association, will continue to engage with state policymakers across the country with the goal of creating a robust and competitive regulated market.”
Analyst Gavin Kelleher at Goodbody Stockbrokers said the news was an “obvious positive” for European operators given the likely “significant expansion” in legalised sports betting in the US.
He added: “Given the regulatory and taxation headwinds that European operators are facing in their home markets over the next few years, today’s news is a very attractive long-term positive for the companies under our coverage and, as such, is supportive of their long-term growth prospects.
“It also could see European operators speculated as potential M&A [mergers and acquisitions]targets given the unique sports betting skill set they possess.”
Momentous decision but devil in the detail
The opening up of the American market to European operators is potentially a huge boost to a number of firms – but do not expect them to simply walk in and carve up the market between them.
The devil will be very much in the detail when it comes to the legalisation of sports betting in the US and the likelihood is that firms will have to deal with individual states, just as they would individual countries, unless a federal solution is found.
Observers have also commented that the US authorities are unlikely to look fondly on their sports betting market being dominated by operators from Europe or elsewhere.
It may instead turn out that European firms become the subject of takeover bids from the giants of US gambling looking to quickly assimilate their knowledge of the sector, following the example of The Stars Group’s purchase of Sky Bet.
Nevertheless, the Supreme Court’s decision is a momentous one.
Courtesy of racingpost.com