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July 20, 2019, 10:34 a.m. EDT

5 stocks set to soar from the U.S. sports betting boom

By Callum Keown


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The Monmouth Park Sports Book on the first day of legal sports betting in New Jersey

The U.S. sports betting market is on the cusp of a nationwide boom.

Industry heavyweights have been clamoring to make the most of the huge opportunity ahead after a year ago last month the Supreme Court relaxed a federal law banning sports betting.

The ruling opened the door for the estimated $400 billion black market to morph itself into the mainstream.

We look at the top five companies set to hit the jackpot just 12 months after the first legal sports bets were placed in New Jersey in June last year. Earlier this week, New York became the 10th state to join the party after Rivers Casino began taking wagers.

The boom has already begun in some places, New Jersey gamblers waged nearly $3bn over the past 12 months in the wake of the first bet, but there is plenty more to come.

U.K. gambling companies, experienced in sports betting, have struck lucrative partnerships with U.S. giants across the pond.

The newly-paired betting giants, along with individual states, are making moves ahead of the new NFL season in September.

Read now: How the NBA and MLB are looking to get a piece of the action from sports betting

Here’s are four U.K. stocks, and one from the U.S., that investors should watch as the U.S. sports betting market looks set to boom.

GVC

The tie-up between MGM (NYS:MGM) , the biggest casino operator in the U.S. and GVC (LON:UK:GVC)  , the owner of U.K. betting powerhouse Ladbrokes Coral could be as formidable as it sounds.

Joint venture chief executive Adam Greenblatt expected a potential market of “really avid sports fans” that is 75% larger than the U.K. to emerge within a couple of years.

On Wednesday GVC reported 16% online revenue growth in the second quarter, helping to offset U.K. retail woes.

See also: Paddy Power subsidiary, Boyd ally in U.S. market

The company also confirmed its New Jersey full online launch was on track for the start of the NFL season.

GVC bosses have championed the “power” of the combination with MGM, which pulls in more than $4 billion in revenue just from Las Vegas.

William Hill

William Hill (LON:UK:WMH)  and its U.S. partner Eldorado (NAS:ERI)   both have analysts backing the stock with overweight ratings almost across the board.

The partnership, launched in September last year, brings William Hill’s sports betting nous together with Eldorado’s 23-million strong customer base and casino portfolio.

Read: U.K. betting companies warn of financial hits

Related: Why Supreme Court sports-betting ruling is ‘absolutely not’ a game changer

Eldorado’s $17.3bn deal to buy rival gaming group Caesars Entertainment last month has further boosted the U.K. company.

Earlier this month William Hill announced plans to close 700 shops following a crackdown on fixed odds betting terminals, sparking suggestions it could pump more cash into its U.S. expansion.

A new technology platform will also be launched in time for the new NFL season.

Flutter Entertainment

Paddy Power Betfair shot out of the blocks last year by acquiring U.S. fantasy sports provider FanDuel.

The company, renamed Flutter Entertainment (LON:UK:FLTR)  in May, increased U.S. revenues by 47% to £78 million in the first quarter and has continued to plough investment into its sports betting strategy.

Don’t miss: At this year’s US Open, the winner will make a record $3.85 million

FanDuel’s 50% sports betting market share in New Jersey, where online gambling is legal, was a key driver of growth.

Chief executive Jeremy Peter Jackson said he was focused on driving home that “unfair advantage”.

Flutter is poised to launch online in Pennsylvania and continue to grow as more states are given the green light.

888

888 (LON:UK:888)  has also ventured into the U.S. sports space, opening a sportsbook in New Jersey with 20 employees.

It became the first online gambling company to pen a sponsorship deal with an NFL team — the New York Jets.

See: The U.S. women’s team won the World Cup, and they’re about to get paid — by sponsors, anyway

The company has also mapped scenarios for the future of gambling in the U.S.

Even in a bear scenario, in which only a handful of new states legalize online gaming, the U.S. would shoot up to second place globally by 2025 behind the U.K.

The Gibraltar-headquartered company has been selective in launching in European markets as and when they have been regulated and plans to do the same in the U.S.

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The Future of U.S. Sports Betting: In-Play Wagers as You Watch

As U.S. states move to legalize sports betting, the Journal takes a look at the world's largest market for the industry—the U.K.—to see how real-time gambling works during a World Cup soccer match.

Boyd Gaming Corporation

When it comes to sports betting, Boyd Gaming (NYS:BYD)  has a finger in every pie.

The company has positioned itself strategically through a number of acquisitions and partnerships in a bid to take advantage of the sports betting surge.

The gaming company partnered with MGM last year to share online and mobile gaming platforms, and has also struck a strategic partnership with Flutter subsidiary FanDuel.

The casino operator, whose shares have risen 26% so far this year, has also opened two sportsbooks in its Mississippi venues and plans to open four more at its venues in Iowa and Indiana.

The VanEck Vectors Gaming ETF (PSE:BJK)  has gained 17% in 2019, while the S&P 500 (S&P:SPX)  has gained 19% and the Dow Jones Industrial Average (DOW:DJIA)  has gained 16%.

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