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Monday was a good day for the gaming industry.
In a landmark moment for stakeholders, the US Supreme Court overturned a long-standing federal ban on state-based regulation of sports betting. Individual states will now be allowed to decide for themselves whether or not to legalize the activity. Prior to the decision, Nevada sports betting had what amounted to a legal monopoly on single-game wagering in the US.
It’ll take a while to process all of the implications, which reach into every corner of the industry. There was plenty of immediate impact, though. As usual, the financial markets were right on top of the news.
As the ruling was being trotted out to anxious reporters, stocks tied to gambling and sports betting began to surge. Reactions from investors provide some good insight into expectations across the industry.
The court decision came down at 3 p.m. in the UK, just 90 minutes before the London Stock Exchange closed for the day. Even on short notice, European gaming stocks posted some of the biggest gains in the industry.
As you’d expect, the big bookmakers were the biggest movers. UK leaders William Hill and Paddy Power Betfair both closed the day with double-digit gains. The surge is especially impressive for PPB, which has a market cap of close to $7 billion. Both outfits are already active in the US, and both have plans for more US-facing expansion.
William Hill, most notably, operates more than 100 Nevada betting facilities. Its name is already hanging behind the sports bar at Monmouth Park racetrack in New Jersey, having rightly predicted their day would come. CEO of the company that operates the track Dennis Drazin says his property will be ready to take bets within weeks, and investors seem to believe him on the topic of NJ sports betting. The William Hill Race & Sports Bar will soon offer betting on both horses and humans.
Paddy Power Betfair also has a footprint in New Jersey, albeit a digital one. Betfair Casino runs on the back of Game Account Network software, which has a convenient partnership with Parx Casino in Pennsylvania. Those two state markets should be among the first to go live, and the stock rally seems to reflect those ambitions.
It’ll be interesting to see if the home-court dominance of these two groups in the UK will foreshadow similar control in US markets.
And speaking of GAN…
Software companies, not surprisingly, showed some huge returns for the day, and the reaction to the Tuesday highs was mixed.
Hopeful for this sort of expansion, all of the major online gaming providers have cultivated relationships with US clients. It’s almost futile to run through the list, which is both expansive and expanding quickly. The partnerships span multiple jurisdictions, across both land-based gambling products and digital platforms for poker and casino.
At the moment, those partnerships are mostly focused on online casino games in limited markets, but the potential for sports betting drove the Monday rush. This group essentially represents the core that will drive online gambling technology forward in the US. Sports betting tech, too.
Casino empires also saw their stocks rise nearly across the board on Monday.
The trend was particularly prevalent for regional groups with broad reach, like Caesars. The Nevada-based giant has peppered the US map with its casinos, maintaining a presence in many states exploring sports betting.
Churchill Downs, Penn National, and Boyd Gaming all took up positions in PA during recent months, each acquiring a new property in the state. All three will likely move into sports betting. Expect CDI, in particular, to leverage its horse betting experience into a strong market share starting in PA.
Eldorado just sold off one of its two PA casinos, but that freed up room for a big acquisition of Tropicana Entertainment properties. The transaction expanded the group’s reach into the neighboring state, providing a home for a potential NJ sportsbook.
It’s also worth noting that Las Vegas Sands and Wynn Resorts own some of the only gaming stocks that dropped on Monday. Sands’ owner Sheldon Adelson is the leading voice against online gambling, and his group just sold off Sands Bethlehem and exited the PA market entirely.
There are other reasons for Wynn’s ongoing stock slide, and it doesn’t have a regional presence related to the SCOTUS ruling to mitigate those struggles.