Stock market tracker: Investors not convinced by US sports betting
Andy Richards, client executive at Hudson Sandler, analyzes the latest movements in the markets
Overall investor sentiment towards the gambling sector has continued to be subdued. UK-listed operators’ share prices have remained under pressure reflecting ongoing cross-sector regulatory concerns in combination with a lack of investor appetite for risk. Despite this, two high-profile media-operator tie-ups across the pond have made waves and given the City plenty to think about.
Following its successful acquisition of Sky Bet, The Stars Group (TSG) seems to be taking the view, ‘if it ain’t broke, don’t fix it’. The tie up with Fox could be great for both parties, not only in the short term but over the length of the commercial agreement’s 25-year term.
With Fox acquiring a 5% stake in TSG, and controlling 50% of the joint venture, the broadcaster will be keen to ensure the new brand leverages its profile to capture market share as states open up. For Fox, success in sports betting isn’t just an additional revenue stream but will also make its stake in TSG a lot more valuable.
News of the tie up between ESPN and Caesars is another interesting development. The broadcaster will use Caesars’ sports betting odds and will give first dibs on any advertising and sponsorship opportunities. Whisper it quietly, but the Walt Disney Company is now exposed to US sports betting…
If Fox Bet flies out of the hatches and storms markets as they open up, ESPN might find it hard to resist diving in for its stake of the riches. However, the contrast between the ESPN and FOX deals reminds investors of an important point when thinking of the US.
The market in the States is not homogenous, it is panoply of contrasting views, warring interests, and local legislators who are yet to decide what sports betting looks like in their slice of America.