View from the City: US investors climb aboard despite rocky regulatory road

It would be easy to dedicate this entire column to GVC given July saw an increased investment in its Roar Digital US joint venture, a strong Q2 trading update, the departure of its figurehead CEO and the opening of an HMRC investigation but, similarly, 300 words is unlikely to do any, let alone all, of those topics justice.

July has been a busy month across the industry, starting with the House of Lords gambling report – which appeared to heed many of the industry’s concerns around overzealous regulation – and sports betting roaring back into life with the conclusion of the Premier League, major UK horse races and the return of other popular betting sports, such as cricket. The universal success of hosting sporting events in the UK against the Covid-19 backdrop couldn’t be matched across the pond as the start of the Major League Baseball season was postponed and National Football League pre-season matches abandoned.

The faltering trajectory of US legislation, as well as sporting events, did little to dissuade investors from climbing aboard the bandwagon however, with Rush Street Entertainment the latest company to go public and again utilising the SPAC route, bringing to four the number of US-listed online gambling companies. Speculation abounds that Flutter, GVC and William Hill may all look to spin-off their US-facing interests but as sales multiples (these companies have no material earnings to speak of) contract and the competition for investors’ dollars increases, the logic for doing so is diminishing, particularly given the rocky regulatory road.

In August attention turns to the UK-listed companies’ reporting season in what is certain to be a mixed set of results with pure online operators faring considerably better than their land-based counterparts who continue to grapple with new sets of Covid-19-induced regulations which will no doubt accelerate the structural shift to digital.