Shares in leading betting companies which have been pushing into the US market because of tighter regulations in the UK, fell after the US Department of Justice called for wider restrictions on all gambling on the internet.
Paddy Power-Betfair fell by over 2.1% before moderately improving, William Hill shed as much as 3.5% and Ladbrokes-owner GVC was down by nearly 3%.
The 2011 reading of the federal law, which came into effect in 1961, prohibits certain types of gambling in the US including sports betting, but the regulator now says the provisions under the act must now be considered in tandem with the Unlawful Internet Gambling Enforcement Act.
The opinion by the regulator’s Office of Legal Counsel added that the new interpretation of the law’s scope will likely be contested in courts.
Betting companies on this side of the Atlantic — including Paddy Power-Betfair, GVC and William Hill — had been pulling off deals to move into the US market after a US supreme court ruling in May took the US a step closer to legal sports betting in numerous states, perhaps nationwide, rather than select states like Nevada — home to gambling capital Las Vegas.
Peel Hunt analysts said in a note that the implications of the developments may not become clear until the US government returns from a shutdown and perhaps until prosecutions start.
Separate figures for New Jersey sports betting revenues show Paddy Power’s FanDuel business is increasing market share. It now has a 38% share of the local market, with market leader Resorts AC on 46%.
Davy recently suggested the Irish betting group’s expansion into the US sports betting market may add as much as €240m to its annual group earnings by 2023.
It said that prior to the betting group turning a profit in the US, its losses will likely “trough” in 2020 at around £150m. Paddy Power-Betfair’s US sports betting business is expected to show a loss of around £25m for 2018.
“The US sports betting market is an exciting prospect for Paddy Power-Betfair.
However, almost everything else regarding this burgeoning opportunity remains unclear,” Davy analyst Michael Mitchell said in November.
Reuters and Irish Examiner