Is investor excitement over US gambling breakthrough premature?
Shares in several UK betting stocks are enjoying a rare moment in the sun as a court ruling opens the door for sports betting to be legalised in multiple US states.
However, some observers are warning the market not to get carried away with the news. Broker Davy cautions against ‘assuming too big a prize too soon’.
‘The shape of a regulated landscape is yet to be determined, with many undecided variables ultimately dictating the size of the opportunity,’ it adds.
UBS points out several concerns over competition, the possible burdensome requirements facing operators and the level of taxation.
Nevertheless William Hill (WMH), 888 (888), Sportech (SPO), GVC (GVC), Paddy Power Betfair (PPB) and Webis (WEB:AIM) all enjoyed healthy share price gains in the immediate aftermath of the news on 14 May.
The landmark ruling from the US Supreme Court could lead to US states legalising betting on college and professional sports.
The court ruling struck down a federal law that required states to ban gambling on sports events. It could pave the way for legal sports betting in numerous sates rather than in select places such as Nevada. Allowing sports betting could be a lucrative source of tax income for states.
The news represents a dramatic turnaround for many UK-quoted gambling stocks which had previously experienced setbacks with the opening up of the US gambling sector. (DC/TS)