Who will be the market leader in US sports betting? The name GVC isn’t likely to be the answer that comes to most Americans’ lips, but GVC CEO Kenny Alexander says his company can achieve that goal.
During the company’s investor call for its half-year 2018 results, Alexander listed GVC’s vision as “to be the world’s largest sports betting and gaming business.”
Bold, certainly, but backed up by the numbers. According to one slide in the investor presentation, the vision has already been achieved:
GVC currently has a market cap of more than $8 billion after acquiring Ladbrokes Gala Coral in March this year.
“In terms of our core battlegrounds, I would say that they are the UK, Germany, Australia, Italy, Brazil and the poker market in general … and the US will soon become one as it begins to open up.”
GVC and MGM have the scale to lead US sports betting
GVC made US news a couple of months ago with a joint venture deal in partnership with MGM Resorts. The joint venture (JV) will see GVC gain the capacity to launch sports betting, online casino and online poker in up to 15 states.
And that’s the basis for Alexander’s claim that GVC will soon be the market leader:
“We have managed to partner up with the biggest land-based player in the US and there’s no doubt about it, I think we will be the market leader, that JV will be the leader in the US and we will have 50 percent of the profits of that JV, so we have positioned ourselves strategically to give ourselves the very, very best chance of success in this market.”
Exactly what will be possible in each state is an open question, but Alexander told investors he planned to be in every state possible, and if that meant striking additional deals with other US partners, then so be it.
The outline of the MGM deal is was summarized during the investor presentation:
Investors asked Alexander about the $100 million investment GVC and MGM both are making. Neither side has any detailed forecast of how much money the joint venture will spend, but $100 million each “seemed about right.”
Who will take the lead in US sports betting?
What makes Alexander so confident is his optimism about the ultimate size of the US market.
“There’s a lot of talk about the US, how big its going to be. There’s no doubt about it, it’s going to be the biggest online, the biggest regulated market, if you take about a five-year view.”
GVC and MGM’s path to market leadership isn’t empty of competition:
- Caesars and Scientific Games already are up and running in New Jersey and Mississippi.
- William Hill has a deal with Eldorado that will have a footprint as extensive as the MGM/GVC deal.
- Paddy Power Betfair has bought FanDuel, which has millions of customers for its DFS operations across the US. FanDuel Group, like MGM, is partnered with Boyd Gaming.
Alexander has got the confidence, the track record, the management team and the partnerships, but his competitors can make pretty much the same claims.
The next five years will tell the tale.