According to Jefferies Group, Flutter, GVC and William Hill will double their profits in five years, in a context of a US$5 billion market opportunity.
The financial website Barron’s recently published a report from Jefferies, a U.S. independent investment bank and financial services company, about the future of sports betting in the Unites States. Jefferies predicted gross gaming yield of US$19 billion from the U.S. market by 2023, equivalent to a US$5 billion EBITDA possibility.
In that potential scenario, Flutter Entertainment (formerly Paddy Power Betfair), William Hill and Ladbrokes Coral’s owner GVC could expand their profits and participation in the business. The report anticipated that, by 2023, Flutter will have a 20 percent of the market share, with William Hill and GVC both having a 10 percent.
Jefferies said 20 U.S. states have so far legalized sports betting, with 14 taking bets, which was “more quickly than we originally anticipated.” The rapid growth in New Jersey, the first new state to legalize since the ruling, is another reason for the Jefferies’ positive analysis. Since the first bet in June 2018, more than US$5.8 billion worth of wagers have been placed in that state.
Flutter, the market leader in New Jersey following its acquisition of FanDuel and Fox Bet, agreed to buy Canadian online gaming company The Stars Group last year to create the world’s largest online betting operator. Since this company stands out in the sector, Jefferies raised its target price from 9,500p to 13,500p, a 57 percent upside from the current price.
While William Hill, which struck a deal with CBS Sports allowing it access to the media giant’s audience, is also well-positioned, according to Jefferies, which raised the stock’s target price from 210p to 400p, a 111 percent upside. The company has also partnered with casino operator Eldorado Resorts, which has since taken over Caesars Entertainment.
In relation to GVC, which has a 50/50 joint venture (ROAR Digital) with U.S. casino giant MGM Resorts, also gets a target price upgrade from 1,100p to 1,500p, a 63 percent upside. After a “slow start” ROAR had an 8 percent market share in New Jersey as of December. The company will target 15 percent by the end of March, Jefferies foresees.