Ladbrokes owner close to agreeing $200m deal with MGM Resorts
GVC Holdings in talks over joint venture to gain access to US sports betting market
GVC Holdings is in “advanced talks” to form a joint venture with MGM Resorts to give both partners a foothold in what is forecast to grow into a multibillion-dollar sector
The UK owner of bookmakers Ladbrokes and Coral is likely to seal a $200 million (€172 million) tie-up with the world’s biggest casino operator this week, to catapult it into the lucrative, newly liberalised US sports betting market.
The FTSE-listed gambling group GVC Holdings confirmed on Sunday it is in “advanced talks” to form a joint venture with MGM Resorts to give both partners a foothold in what is forecast to grow into a multibillion-dollar sector.
GVC and MGM Resorts - best known for major Las Vegas casinos such as the MGM Grand and the Bellagio - are understood to have agreed to inject an initial $100m each as part of a 50/50 joint venture focused on US sports betting.
The collaboration is likely to involve a 25-year commitment, with an option for either company to buy the other out after 10 years. It would make GVC the lead sports betting and online gambling services provider for all MGM’s casino and hotel properties in the US.
Importantly, the deal will allow GVC and MGM to work together to create gambling/betting ventures within newly sanctioned US states, delivering a range of land-based and digital gambling opportunities.
In May the US supreme court overturned a federal law that banned gambling on American football, basketball, baseball and other sports in most US states.
That was an eagerly-anticipated watershed for Britain’s bookmakers, who have been jockeying for position to gain a strong foothold in the US. They have the advantage of years of experience because of Europe’s more liberal approach to sports gambling, while the sharing of a common language reduces barriers to entry.
Analysts have been scrutinising GVC’s movements, and those of its FTSE counterparts, Paddy Power Betfair and William Hill. Both used horse racing and sportsbook acquisition to sow the seeds to a solid base from Nevada to New Jersey, where sports betting was already permitted.
Paddy Power Betfair already has 300 US staff and owns the TVG television network showing live horse racing - betting on live animals was not banned under the previous legislation. In May, it bought the US fantasy sports betting site FanDuel, which allows customers to bet on fantasy sport games based around NFL American football, NBA basketball, MLB baseball and NHL ice hockey.
The Professional and Amateur Sports Protection Act of 1992 (PASPA) effectively outlawed sports betting nationwide, with the exception of a few states including Nevada. The result was a thriving underground betting industry that accepts an estimated $150 billion (€128 billion) in illegal wagers every year, according to the American Gaming Association.
GVC, which also owns the Sportingbet brand and has grown rapidly through acquisitions including the purchase of Ladbrokes last year, had been evaluating opportunities to expand in the US since the supreme court decision.
GVC, which is based on the Isle of Man, said it would update the market “when appropriate”. Sources suggested the tie-up could be announced as early as this week. – Guardian News and Media 2018