International Policy Digest

Sponsored Content /22 Aug 2019

Big Players Making Moves for Regulated Online Gambling in the U.S.

Before 2018, when online sports betting was illegal across the United States, Americans bet an estimated $155 billion on sports every year. Only $5 billion of that money was through legal channels in places like Nevada where betting was allowed.

In light of these numbers, the Supreme Court decision in August 2018 makes sound sense. Why bother prohibiting something that people indulge in regardless? Legalization would at least keep that money out of the black market, bringing vital tax revenue to the states. Enemies of legalization like Sheldon Adelson have lobbied for years to stop this from happening.

There is another compelling reason for legalization. The regulated online gambling and betting market in the U.S. has the potential to bring in hundreds of thousands of jobs, contributing billions to the economy.

At present, the legal situation is very fluid, with each state having its own process for legalization. If you want to know more, there are many websites that offer additional information about U.S. gambling laws.

The different types of “sharks” circling around the U.S. waters.

The opening of such a massive online market has attracted the attention of many big players, both within and outside the gambling industry. This includes a disproportionate amount of offshore companies, due to the fraught history of online gambling in the states.

Since the advent of the Internet, the federal government and the Justice Department, in particular, have taken a hostile stance towards online gambling. With the exception of sports betting in recent years, online casino gambling still remains very much within the crosshairs of the government.

And over the years, this has led to a stagnation of the online gambling market in the U.S., with the notable exception of Las Vegas. When you discount the casinos in Atlantic City and Las Vegas, very few homegrown companies are active in the online gambling scene, especially on the tech side of the equation.

Meanwhile, in the global market, Europe has stolen a march on everyone else with their more liberal take on regulated online gambling. This has led to the rise of a diverse field of companies looking to enter the newly opened online betting markets in the United States in 2018-19. These include:

  • Las Vegas casino brands like MGM and Caesars
  • European online gambling companies like Bet365, William Hill, and Betsson
  • Gambling software firms like IGT, Scientific Games, CG Technologies, and SB Tech
  • Big media houses like Warner Bros and ESPN

Let’s take a look at some of these groups and how they are moving into online gambling markets in the U.S. right now.

U.S. casino groups look to leverage their expertise in the online sphere.

The established casino stocks in Las Vegas and elsewhere took an initial hit in the market when sports betting was legalized. The opening up of the market to new players undoubtedly presents a clear and present challenge to the hegemony of casinos like MGM and Caesars in the field of Las Vegas sports betting.

But with different states legalizing online gambling at their own pace and rules, casino brands are quickly moving to reposition themselves in this new market. MGM, for instance, has big plans for the future. They have already inked deals with pro leagues like the MLB for official licensing of sports betting products.

Caesars, their Las Vegas rival, has signed similar deals with the NFL. On the sports betting technology front, MGM is partnering with British giant GVC (owner of Ladbrokes), while Caesars has opted for a joint venture with U.S.-based gambling tech company, Scientific Games. The latter is a name to watch in the U.S. online gambling market in the years to come.

Boyd Gaming is another major brand from Las Vegas looking to make waves in the U.S. sports betting markets outside Nevada. They already have joint ventures with MGM to share mobile betting platforms.

Some stocks have been buoyed by the changes in regulation.

The story of Scientific Games, one of the few American names in online casino tech.

Operating out of Las Vegas, Scientific Games has a history dating back to the 1970s. They are credited with creating the first-ever instant lottery in the country back in 1974. Since then, the company has forayed into online technologies for gambling and sports betting.

By 2018, the company had grown into a multi-billion dollar enterprise valued at over $4.5 billion. They are one of the few American names in the casino tech business which is largely dominated by British and European companies.

Even before the Supreme Court ruling, Scientific Gaming had an aggressive growth plan. With a spate of acquisitions, their portfolio included noted online casino software brands like NYX Gaming, WMS, Bally Technologies, and Barcrest. Since online casino gambling is largely illegal in the U.S., these names may not be that familiar to Americans.

But for regular online gamblers in Europe and other global markets, these names are quite familiar indeed. And their parent firm, Scientific Games, has a firm hold on the online software aspects of sports betting. As U.S. casinos look for ways to bolster their online and mobile capabilities, Scientific Games is uniquely positioned as a homegrown company to cater to this demand.

They already have a deal with Caesars, providing online and mobile technology expertise to the Las Vegas casino brand. Now with an increasing number of land-based casinos in Nevada and Atlantic City looking to enter the mobile space, providers like Scientific Games will profit the most.

The new wave of British brands invading U.S. shores.

Britain has one of the biggest, most highly regulated online gambling and sports betting markets in the world. Naturally, this has led to the rise of several giants in the industry there, with British roots and a global reach thanks to the Internet.

They all have different approaches to the U.S. sports betting market. William Hill, for instance, has chosen to boldly wade into the retail sector. They already had a presence in the U.S. since 2012, and now have a retail presence in all states where online sports betting is legal.

As already mentioned earlier, GVC has taken the joint venture route, partnering with MGM for access to over 19 U.S. states. In stark contrast, 888 is operating exclusively in the online space, with a focus on New Jersey in particular,

Paddy Power owns FanDuel, an established name in fantasy sports across 41 states in the U.S. They have a strong presence in the online sports betting markets of New Jersey at present.

These are but a few of the big names looking to cash in on what promises to be a very lucrative market worth hundreds of billions of dollars in the near future. These are exciting days for the U.S. gambling industry indeed!

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