Casino Stocks Climb After Court Repeals PASPA Sports Betting Ban
Within hours of the United States Supreme Court striking down a federal ban on sports betting, casino operators and gaming industry providers saw their stock values soar.
According to a report from Bloomberg, companies like MGM Resorts International, Caesars Entertainment, Boyd Gaming, and Scientific Games each saw their share price climb on May 14 – the day the Court ruled to repeal the Professional and Amateur Sports Protection Act (PASPA).
Passed in 1992, PASPA – also known as the Bradley Act – banned single-game sports wagers in all states but Nevada, with three other states (Delaware, Montana, and Oregon) permitted to offer parlay card lottery games based on sports.
Following the Court’s 6-3 decision in Murphy v. NCAA – a case involving New Jersey’s repeated attempts to legalize and regulate sports betting within the state – PASPA has essentially been rendered null and void. As a result, New Jersey is expected to begin operating sportsbooks by Memorial Day, while several other states including New York, Pennsylvania, and West Virginia have already passed similar legislation.
With sports betting in the Garden State linked via legislation to Atlantic City’s brick and mortar casinos – a system which will likely be mimicked elsewhere – gaming company shareholders are reaping immediate dividends.
Per the Bloomberg report, Caesars Entertainment – the largest casino operator in the country – saw its stock price increase by 7.1 percent. Shares of Caesars (CZR) closed at $11.90 on May 11, the last day of trading on the NASDAQ before the Court’s decision came in. By the close of trading on May 14, CZR shares had risen to $12.55, with a midday peak of $12.88.
In a public statement, Caesars president and chief executive officer Mark Frissora celebrated the expansion of legal sports betting:
“The Supreme Court’s landmark PASPA ruling creates a golden opportunity to end illegal sports wagering once and for all by creating a well-regulated alternative that sports fans can trust.
Caesars is a leader in legalized gaming in the U.S. As a result, we expect to be able to provide safe, exciting sports wagering experiences to consumers across the country, as we do today in Nevada.
We plan to announce our specific approach to this business as we better understand the opportunities and regulations which evolve from today’s Supreme Court decision.”
Caesars’ chief rival in the American gaming space, MGM Resorts (MGM), experienced a 3.5 percent gain on the PASPA news. At the close of New York Stock Exchange trading on May 11, shares of MGM were worth $31.81, but they peaked at $32.45 near the end of trading on May 14.
MGM President William Hornbuckle issued a statement predicting 20 percent of the country would be open to legal sportsbooks by 2020:
“We believe in the next two years to three years, there are 10 to 12 states that are ripe and ready to activate on that.
We will be there. We will participate in it. We bring technology. We bring knowledge.
And frankly in this space, we bring trust.”
The Bloomberg report cited similar estimates from Carlo Santarelli, an analyst for the New York-based Deutsche Bank Securities. Per Santarelli, the American sports betting market – both online and live – could top $4 billion by 2023 if at least 13 states craft regulations.
Other gaming industry stakeholders with higher stock prices in the post-PASPA era include U.K-based bookmaker William Hill – the leading operator within Nevada’s legal market – and sportsbook technology provider Scientific Games.
After closing at £280.00 on May 11, shares of William Hill (WMH) shot up to £311.00 by closing on May 14 – good for a gain of more than 11 percent.
Scientific Games (SGMS) moved from $53.35 to $60.90 over the same period, representing a 13 percent improvement.