The owner of Ladbrokes and Coral will unveil a $200m (£153m) tie-up with the world’s biggest casino operator next week in a bid to dominate what is poised to become a multibillion dollar US sports betting market.
Sky News can reveal that GVC Holdings is this weekend finalising the details of a long-term joint venture with MGM Resorts International, owner of famous Las Vegas brands including the MGM Grand, Bellagio and The Mirage.
City sources said the deal, which will ultimately encompass online sports betting and other interactive gaming services across the US, could be announced as soon as Monday.
Although the partnership will not involve the two companies swapping equity, insiders said it was “logical” to suggest that a successful alliance could eventually lead to a full-scale merger to create a global gambling behemoth.
Their new joint venture, made possible by a liberalisation of US gambling legislation, is expected to be structured as a 50-50 operation into which both companies will commit an initial $100m (£76m).
The deal will marry GVC’s technology expertise and platforms with the footprint and brand of MGM, one of the world’s biggest hospitality groups.
It is likely to include a commitment of around 25 years from GVC and MGM, with an option in their agreement to buy each other out after 10 years, according to one source.
The deal will get under way in Nevada, the only state where sports betting remained legal after the passing of laws in 1992.
GVC and MGM will then expand the partnership to other states which legalise the pastime, with as many as 15 likely to do so in the near future.
One source said they expected the announcement to provide a significant boost to shares in GVC, which has a market value of £6.29bn.
MGM’s market capitalisation at the close of trading on Friday stood at $17.5bn (£13.4bn), making it more than double the size of its British partner.
While the MGM brand will be the dominant player in the services launched under the joint venture, insiders said GVC’s Partypoker and Sportingbet brands will also be used.
That decision will mean a return to much of the US for Partypoker more than a decade after it was forced out amid a legislative clampdown.
The deal between GVC and MGM comes amid a frenzied land-grab by multinational gaming groups to secure a slice of a nascent US sports betting market which was thrown open in May by a Supreme Court ruling.
Paddy Power Betfair recently agreed to buy FanDuel, a fantasy sports league operator in the US.
William Hill has yet to strike a deal with a US partner, although it is understood to have held talks in the last few weeks with a number of companies.
Roger Devlin, William Hill’s new chairman, recently warned that a Government crackdown on the amounts that can be wagered on Fixed-Odds Betting Terminals would leave the company vulnerable to a takeover bid from a foreign rival.
The deal between GVC, led by chief executive Kenny Alexander, and MGM, run by Jim Murren, was described as “a masterstroke” by one insider on Saturday.
Ladbrokes’ parent and MGM already collaborate in New Jersey, where last year they began offering online casino and poker games under the playMGM brand.
The UK gambling sector has witnessed a flurry of deals in recent years, including Ladbrokes’ merger with Coral and the subsequent takeover of the combined entity by GVC.
In April, Sky Bet was bought by Canada’s Stars Group in a £3.4bn deal.
Moelis, the investment bank, is advising GVC on the talks, while MGM is using bankers at PJT Partners.
A GVC spokesman declined to comment this weekend.
From – SkyNews
