Major movements in the U.S. Gaming Market
This past weekend may have been slow from a sports perspective, but it sure seemed like good timing for the U.S. gambling world to make some news. Over the weekend, online gaming giant GVC Holdings agree to enter a joint venture with land-based gaming giant MGM international. This joint venture will build out an online betting platform specifically for the newly-opened U.S. gambling market.
This is a deal of historic proportions for many reasons. Let’s start with the two companies involved in the deal, which are two of the largest in the world. MGM is well-known as the leader in the land-based gaming space around the world, and their reach in the U.S. includes properties in 15 States (with more to come no doubt). The potential reach of this deal for MGM is upwards of 90 million American residents. GVC Holdings may not be as familiar a name to those of you outside the online gambling world, but rest assured they are bringing something to the table. The company owns some of the most recognizable brands in the UK betting industry such as Ladbrokes and Coral, and they also own the Sportingbet brand that was at one time one of the largest in the then-grey U.S. market. And of course, it doesn’t hurt that GVC also owns a little poker company you may have heard of – Party Poker.
In a press release announcing the Joint Venture, MGM Chairman and CEO Jim Murren said “We are proud to join forces with GVC, the largest and most dynamic global online betting operator, with existing reputable and trusted operations in the U.S. With MGM Resorts’ expertise and leading position in key markets across the U.S., this historic partnership will be positioned to become the instant leader in technology, market access, sports relationships, and brands. We are excited to benefit from GVC’s proprietary, best-in-class technology, digital customer acquisition expertise, and experience with adapting to new operating environments. GVC is unusually qualified due to their existing operations in the U.S. Together, we are creating a one-of-a-kind platform that we expect will dominate the U.S. sports betting market.”
GVC’s CEO Kenneth Alexander was equally as bullish on the upcoming deal. “MGM Resorts is a world-leading entertainment business and the most trusted name in gaming, with the highest quality brands and management, and strong sports connectivity. This combined with GVC’s technology and experience in successfully building online gaming businesses across multiple markets presents a truly exciting opportunity for U.S. players and our respective shareholders. To be able to team up with a partner with such pedigree and knowledge, particularly in the U.S., is a real opportunity for GVC.”
The joint venture will have two parts to it – one focusing on the U.S. Sports betting market, which is now ready for state-by-state regulation in the wake of the repeal of the Professional and Amateur Sports Protection Act by the Supreme Court. The other half of the deal will focus on online gaming opportunities across the country where it is legal. That is only a small number of states currently, but it is expected to spread quickly as these new sports betting bills are introduced.
The two entities have agreed to each invest $100 million into this joint venture, making it one of the largest gaming operations on its own, regardless of who is backing it. This news has sent shockwaves across the gambling world. The move by GVC to sweep all of the MGM business with this joint venture will shoot them to the top of the pile when it comes to the players in the burgeoning U.S. market. Already GVC has seen its share price skyrocket over 5% in just the first few hours after the announcement.
The rest of the U.S. gambling market needs to step up and take notice of what happened here. We believe that the remaining deals to be made are more of the one-off variety, but with the looming cloud of MGM-GVC as a competitor overhead, business just got a lot tougher in some U.S. States.
As more information about this deal is released, we will bring you the details. The plan is to have the sports betting platform ready for launch where possible in time for the start of the NFL season in September.