Investors in UK bookmakers have taken a punt on a surge in sports betting in the United States following a ruling that paves the way for it to be legalised in the country.
A 1992 law called the Professional and Amateur Sports Protection Act (PASPA) meant that Nevada, home to Las Vegas, was the only state where a person could wager on the results of a single game.
Horse racing is currently the only legal form of sports gambling widely available across the US in person and online.
But in a 6-3 majority decision by judges on Monday, the US Supreme Court agreed with a complaint from New Jersey, which has fought for years to enable gambling on sports at casinos and racetracks in the state.
It argued that people should be free to choose to gamble – overcoming opposition in court from the governing bodies and owners of America’s biggest sports including the NBA, NFL, NHL and Major League Baseball.
They had raised fears that an expansion of betting on events risked the integrity of their respective sports.
Image: Horse racing is the only major sport where betting is currently widely allowed in the US
In the ruling, Justice Samuel Alito wrote: “The legalisation of sports gambling requires an important policy choice, but the choice is not ours to make.
“Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.
“Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution.”
“PASPA is not,” he concluded.
One research firm estimated 32 US states would seek to offer sports betting in the wake of the ruling – bringing in to the open a market in illegal gambling currently worth $150bn annually, according to the American Gaming Association.
Casino and gambling stocks surged on the ruling.
The value of UK-listed bookmakers – hit recently by plans to limit stakes on fixed-odds betting terminals – also got a lift on hopes their established businesses would be well positioned to cash in.
Paddy Power Betfair gained 12.2% by the close of trading on Monday while William Hill and GVC had risen by 10.7% and 7.4% respectively.
Greg Johnson, travel and leisure equity research analyst at Shore Capital stockbrokers, said: “We suspect that the next few years are likely to be an investment phase with little meaningful profit contribution expected for operators…
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“From an operator perspective, the US opening up may help alleviate concerns over both Paddy Power Betfair and William Hill’s international growth profile…
“We would see the initial price reaction as little exuberant and would highlight GVC as our favoured play of the large cap sports betting operators, noting its wide international spread, momentum and significant synergy opportunities post the acquisition of Ladbrokes Coral.”