GVC Holdings and MGM Resorts International are going into business together in a deal worth $200m. Reports emerged over the weekend that these two giants were in the final stages of a deal that will create new gaming services and online sport betting throughout the United States.
While the two companies will not be swapping equity, many industry experts predict that this joint venture is the first step in what could be a full-scale merger that would create a gambling juggernaut with a global presence with an estimated value of over $26 billion. GVC Holdings is one of the biggest operators of online gambling sites while MGM is one of the most recognizable names in the gaming and hospitality industry.
50/50 Partnership Expected
For now, the operation is expected to be a 50-50 partnership in which GVC Holdings and MGM Resorts International will provide an investment of about $100 million each. Insiders believe that the deal will include a 25-year commitment from both parties with a possible option to buy each other out in 10 years. If finalized, this merger is expected to provide quite a boost to the value of GVC shares which currently have a market value of over £6 billion. MGM’s current market value stands at about £13.5 billion.
This partnership is great news for the sports betting industry in the United States as well as the online casino industry. This new deal will also likely mean the return of GVC’s flagship brands like partypoker and Sportingbet to much of the American market.
New Deal Targets US Sports Betting Market
This deal between GVC and MGM will see operations begin in Nevada where sports betting has been legal since the early 1990s. New Jersey has recently legalized sports betting and there are over a dozen states that are poised to make sports betting legal in the near future. This partnership will expand into those states as they open up.
Now that the US sports betting market has opened up with the repeal of the Professional and Amateur Sports Protection Act of 1992 (PASPA) in May 2018, there is no shortage of companies that are actively seeking their piece of it. There has been a lot of activity lately as some of the big European bookmakers try to claim their share. Paddy Power Betfair recently acquired the American fantasy sports service FanDuel while William Hill opened New Jersey’s Ocean Resort Casino and is actively looking to expand further.