The FTSE 100 owner of Ladbrokes, Coral, Bwin and Sportingbet, has teamed up with casino giant MGM Resorts to capitalise on opportunities opened up by a ruling overturning a law that made gambling on sports such as baseball, football and basketball illegal.
Both companies will initially commit $100million, setting up a separate headquarters in a major US technology hub and each providing two board directors and management team.
The deal, just ahead of the professional American football season, will see GVC providing the betting platform and technology, with MGM, owner of Las Vegas casinos including MGM Grand, Bellagio and Mirage, supplying locations, gaming brand and access to key US states.
GVC chief Kenneth Alexander said: “MGM Resorts is a world-leading entertainment business and the most trusted name in gaming, with the highest-quality brands and management.
“This combined with GVC’s technology and experience in building online gaming businesses across multiple markets presents a truly exciting opportunity for US players and our shareholders.
“To team up with a partner with such pedigree and knowledge particularly in the US, is a real opportunity.” GVC said the venture would get access to 15 states with a population of 90 million through MGM’s agreement with Boyd Gaming. Its shares jumped 59p to 1154p.
Shore Capital’s Greg Johnson, who believes US sports betting could be worth $20billion, said: “GVC appears to have struck gold by signing a 50/50 joint venure with arguably the biggest gambling brand in the US.”
Berenberg’s Roberta Ciaccia added: “This is the ‘big and bold’ deal that GVC had intimated.
“A 50/50 joint venture would enable GVC to benefit from a much larger profit pool, and any initial operating losses would likely be compensated for by future market share gains – something we do not doubt, given the power of the MGM brand and the access it can provide to a client base of about 27 million.”