A Comparison of the UK and US Market: Is it a Good Time to Invest in Online Gambling Stocks?

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Online gambling has been a trend that’s been going on for more than 20 years. Casino enthusiasts can place bets from the comforts of their home and reap amazing benefits. To make it more convenient, gambling moved to mobile phones and has been going strong since 2010. As many online casinos rise to prominence a frequent question that pops up is: Why should you invest in casinos and online gambling stocks?

The answer is simple: because it pays off. If you take a look at the UK market you will notice that their operators have a strong advantage against their US competitors since they have already established themselves as the biggest online gaming market in the world with top tier brands like 888 casino, William Hill, GVC, Bet365, and others. However, the British gambling sector is bombarded with tighter regulation and taxes.

This situation is favorable for US competitors. Because sports betting was banned in all of the states for 25 years, except for Oregon, the seat of Oregon Lottery, Nevada, famous for Las Vegas, Delaware, and Montana, the sudden shift in the market shows the complexity of the US market. Last year, the Supreme Court ruled PASPA out as unconstitutional which gives the states freedom in regulating sports betting. The future of the global gambling market might be decided by the way each state authorizes betting on sports and could potentially tip the odds in their favor.

On the other hand, there have been some mergers in the UK market. In 2015 Paddy Power merged with Betfair and in 2016 Ladbrokes and Coral Joined up, and just a year later they were taken over by GVC. William Hill and GVC, as operators of the majority of the UK’s betting shops, need to be customizing their retail operations to adapt to a less profitable market before the stake cut takes effect in April.

It is reported that around £5bn are wagered online by UK customers which is more than half that goes on casino-type games. On a global scale, remote gambling has a steady 9% growth in the past ten years, despite being in its infancy.

Some researchers state that seven US states are going to allow betting on sports this year and with that, it’s estimated to produce a revenue of around $1.5bn from physical and remote betting. Twenty states are presumed to follow adding additional £7.5bn to the already outstanding revenue. Nevertheless, the UK’s operator’s advantage was not just in establishing themselves as successful brands at home, but globally as well.

William Hill is already established in 17 of the said 20 states so it might make a substantial revenue of about $5.2bn. Hills operates with Eldorado Resorts where it provides online and offline betting services in 13 states. GVC, another major UK operator, is allied with MGM resorts and their joint venture gives the operator access to 15 states. Finally, Paddy Power Betfair already runs a New Jersey online casino.

With the UK slowly tightening its grasp around the US market but facing tough regulation home and the US’s new legislation on sports betting, it’s safe to say that investing in gambling stocks now will pay off in the future.

GVC is one obvious choice for investments since it’s worth £3.9bn and has a good hold of the US market, and is an FTSE 100 constituent. Another logical choice would be William Hill, whose last estimates indicate a price target of 243p, which is 40% more than current levels.

Boyd Gaming comes next since brokers predict a climb of 33% from current levels in the next 12 months. Another choice to consider would be Sportech because of its large exposure to the US market which could pay off.

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