New York (Reuters) - Shares in gaming and casino companies jumped on Monday, led by Scientific Games Corp, as investors wagered on new business opportunities for the industry after the U.S. Supreme Court paved the way for states to legalize sports betting.
The ruling endorsed New Jersey’s bid to allow sports betting and struck down a 1992 federal law that widely prohibited the practice, potentially adding a new line of business for many casinos and for betting technology providers such as Scientific Games and International Game Technology.
It takes the United States a step closer to the possible expansion of legal sports betting nationwide, rather than in select places such as Nevada, home to gambling capital Las Vegas. The illegal sports betting market is worth billions of dollars annually.
Scientific Games is particularly well placed to benefit from the ruling due to its acquisition in January of Canadian digital gaming and sports betting firm NYX Gaming Group Ltd, said Todd Eilers, analyst at Eilers & Krejcik Gaming.
“I’d say there’s a lot of states that would move forward with sports betting,” said Eilers, who expects Scientific Games and International Game Technology to seek contracts with casino operators looking to expand into sports betting.
“Any regional casino operator with a lot of casinos across a lot of states would be the best positioned,” he added.
Scientific Games shares were last up 11.6 percent at $59.53, a record high, with trading volume 4.6 times the 10-day moving average.
International Game Technology shares were up 3.4 percent, on track for their biggest one-day percentage gain since early March. Shares in racetrack and casino operator Churchill Downs hit a record high and were last up 5.5 percent at $294.41 with trading volume 2.9 times the 10-day moving average.
In London, shares in William Hill, which operates legal sports betting in Nevada and is preparing to start operating in New Jersey, rose 10.7 percent.
The company could be ready to take bets in less than a month from New Jersey’s Monmouth Park Racetrack if the state gives it the legal go-ahead, William Hill US Chief Executive Joe Asher told reporters on a conference call.
“We’re going to get ready to open for business as soon as possible,” said Asher, who estimated that $10 billion is bet on sports annually in New Jersey. Since bookmakers typically keep about 5 percent of a wager, that would represent a $500-million business in that state alone.
William Hill has infrastructure in place in Delaware as well as New Jersey, but Asher did not give a timeline for starting operations in that state.
Jefferies analyst David Katz estimated in an April research note that the market for legal sports betting could range between $1.2 billion and $57.6 billion of total wagers, with proceeds for gaming operators between $62 million and $2.9 billion.
Katz also said negotiating regulations and issuing licenses could be time-consuming and push earnings out further than some investors might expect.
Casino and race track operator Penn National shares registered a record high, last up 4.3 percent at $33.62. Shares in Caesars Entertainment, which operates casinos in 13 U.S. states and five countries, were last up 4.6 percent at $12.45.
Madison Square Garden, owner of the New York Knicks basketball team and the New York Rangers hockey team, was last up 2.9 percent at $261.48.
Shares in overseas bookmakers Paddy Power Betfair and GVC Holdings also jumped in brisk trading on Monday. (Reporting By Sinéad Carew in New York and Lawrence Hurley in Washington D.C. Editing by Rosalba O’Brien and Nick Zieminski)