The price of the shares in many UK-based gambling operators suffered a big slump after Steven Engel, the US Assistant Attorney General from the US Department of Justice, published an opinion a few days ago, which reversed the one published back in 2011, which limited the scope of the 1960s ban on internet sports wagering online. The opinion made all internet gambling illegal according to federal law. Some of the companies whose shares dropped are William Hill, GVC Holdings, Paddy Power Betfair and 888 Holdings.
In the opinion, Steven Engel stated that the Department of Justice concluded that the laws that prohibit gambling are not limited to sports wagering. He also stated that he is expecting that view to go through a day of testing in courts. Such opinion quickly echoed in the industry and affected the stocks of many bookies who have started to go on a land grab hunt in the United States. These operators did that following the decision on the 14th of May, which canceled the 1992 federal law which prevented the states from legalizing sports wagering. On the other that, that new development is now threatening the derailment of a long list of lucrative agreements and partnership between several UK operators and land based casinos in the US market.
UK Operators in the United States Market Shocked After US Department of Justice Announcment
GVC Holding was one of the first operators to dip into the new US regulated market back in July. It has announced its joint venture with MGM Resorts International, the Las Vegas land-based casino operators, where both companies agreed to pump $100 million. The group is going to release an update on trading soon, so a response to the current development mostly likely going to be a part of it.
William Hill is another UK operator who might be feeling antsy following sighing up an agreement with Eldorado Resorts, the multibillion-dollar casino back in September after the legalization. The deal came with plans to open sportsbooks in five out of the twenty-one Eldorado properties across the United States. The current development is also going to cause concern to 888, since the UK firm just spend $28 million to buy the 53% stake in the All American Poker Network that it didn’t already own, which was an integral part of its growth strategy in the states, which is a move that will run into numerous obstacles. In numbers, 888 shares decreased by 7.6%, Paddy Power decreased by 2.4%, and GVC was down by 2.4% while William Hill’s shares dropped by 3.5% after the announcement of the US Department of Justice
Pressure Offshore and Back Home
It seems that the UK operators are getting the short end of the stick, at both, offshore at the US, and back home in the UK. The pressure on the two fronts is a result of the new possible restrictions in the US market, as well as the crackdown in the UK on problem gambling. The crackdown in the UK included reducing the maximum wager at the FOBTs to £2, in addition to the agreement that the betting firms reached regarding stopping their adverts during live sporting events.