View from the City: Why the US is key for operators on both sides of the pond
Bertie Berger, client director at Hudson Sandler, analyzes the latest market movements in the US and considers the market's 2021 outlook
US online strategies form key parts of operators’ investment cases on both sides of the pond. While operators expect some revenue tailwinds into 2021, growth will be hard to come by given tough comparisons. The US could provide some impetus for 2021 and February was not short of promise, as state lawmakers gave guidance on legalisation, regulation and new access deals.
Following the news of bills to regulate online sports betting in Massachusetts and Wyoming in mid-February, two House Representatives in Illinois introduced legislation last month to authorize online gaming. Meanwhile, Texas lawmakers also introduced legislation to legalize and regulate sports betting.
That said, it has not all been plain sailing for gambling legislation. In Georgia, for example, Democrats are withholding support on a House Bill that would legalize online sports betting in the state as retaliation against Republican efforts to roll back voting access. As has been the trend in the US over recent years, party politics looks set to permeate the legislative agenda.
For European-listed operators, the race for US access becomes ever more frantic. In recent weeks, Malta-based Carousel Group announced it had entered into a multi-state market access agreement with Caesars Entertainment to launch its SportsBetting.com brand in the US. The deal would see sports platform launches in New Jersey, Indiana, and Iowa, and an online casino offering in New Jersey, subject to license approval.
The introduction of more European players combined with access deals is catching the eye of all industry stakeholders, including the banks. A recent JP Morgan analyst note discussed prospects for European gaming operators, predicting that, “with online (particularly igaming) facing tough Covid-19 comps, the US will likely be the key source of growth in 2021 despite still making up a relatively small portion of revenue [for European operators].”
Frequent updates from state representatives, as well as entry from new players, provides investors with a sense of optimism for the US opportunity which, as JP Morgan notes, will be “driven by the opening up of new states and the maturing of existing states.”