Gambling company GVC (GVC) seals a 50/50 joint venture worth $200m with MGM Resorts International to create a sports betting and online gaming platform in the US.
This deal, which will see both parties put in $100m, is the latest in a string of tie-ups across the industry following the repeal of the US Federal Professional and Amateur Sports Protection Act in May.
Shares in GVC have climbed 5.2% to £11.52 as the market is excited by its ability to use its tech and online capabilities in partnership with MGM’s gaming relationships, brand, gaming sites and customer base.
MGM boasts a network of properties in the US and over 27m M Life rewards members, as well as access to the New York market through a deal to buy the operating assets of Empire City.
MGM has also sealed a market access deal with Boyd Gaming, opening up a pathway to 15 states, comprising 90m people.
The new venture will benefit from exclusive access to US land-based and online sports betting, as well as real money and free-to-play casino gaming, major tournaments and online poker.
GVC is optimistic the joint venture can help both parties enter the market quicker, potentially lowering execution risk and offering early mover advantages.
It will also allow an integration between MGM and GVC’s loyalty programs to bring back existing customers and lure in new ones.
ANALYST REACTION
Shore Capital analyst Greg Johnson says GVC has ‘struck gold’ by agreeing a joint venture with arguably the biggest gambling brand in the US.
He argues ths US sports betting market could eventually be worth $20bn, meaning a 10% market share with a 20% earnings and between 10 and 15 times multiple could be worth $4bn.
‘Given its greater momentum, lower valuation and arguably that it is now better positioned to exploit the US, we suggest switching out of Paddy Power Betfair (PPB) to GVC,’ comments Johnson.
