MGM Lands Major International Partner for US Sports Betting in $200 Million Deal

MGM Resorts International and GVC Holdings have agreed to join forces to target the growing USA sports betting and online gambling markets. The companies issued a press release yesterday announcing their intention to each contribute an initial $100 million in a 50/50 joint venture that will be headquartered in the US.

The joint venture will permit both companies to leverage key advantages such as brand recognition, proprietary technology, market access and market knowledge to build out a major online sports betting and gambling platform as legalized gaming spreads across the US.

Sky News reported the deal will not involve both companies swapping equity; instead they will collaborate 50/50 in a spin-off joint venture. However, insiders did tell Sky News that a complete merger is not out of the question down the road.

In a press release, MGM Resorts Chairman and CEO Jim Murren said this:

“We are proud to join forces with GVC, the largest and most dynamic global online betting operator, with existing reputable and trusted operations in the U.S. With MGM Resorts’ expertise and leading position in key markets across the U.S., this historic partnership will be positioned to become the instant leader in technology, market access, sports relationships and brands.

“We are excited to benefit from GVC’s proprietary, best-in-class technology, digital customer acquisition expertise, and experience with adapting to new operating environments. GVC is unusually qualified due to their existing operations in the U.S. Together, we are creating a one-of-a-kind platform that we expect will dominate the U.S. sports betting market.”

GVC Chief Executive Kenneth Alexander said this:

“MGM Resorts is a world-leading entertainment business and the most trusted name in gaming, with the highest quality brands and management, and strong sports connectivity. This combined with GVC’s technology and experience in successfully building online gaming businesses across multiple markets presents a truly exciting opportunity for U.S. players and our respective shareholders. To be able to team up with a partner with such pedigree and knowledge, particularly in the U.S., is a real opportunity for GVC.”

Both Companies Bring Key Advantages to the Partnership

The joint venture will leverage key strengths held by each company as they seek early mover advantage in a US market that is primed for growth. While MGM brings US market expertise and access to the table, GVC Holdings brings digital gaming and compliance experience as one of the world’s major online gaming brands.

Market access is perhaps the key advantage MGM brings to the partnership. It has become somewhat of a recurring theme in states that have passed or proposed legislation to require potential online gaming operators to already have a licensed casino in that state.

MGM Resorts International operates properties across the US, including major resort casinos such as the Borgata in Atlantic City, Beau Rivage in Biloxi, MGM Grand Detroit in Michigan and the MGM National Harbor in Maryland. MGM is also in the process of purchasing Empire City Casino in New York. Soon, MGM will have casinos in eight states.

Additionally, MGM is in the process of forming a partnership with the Boyd Gaming Corporation to allow both companies to expand their online sports betting and gambling operations through casinos operated by each company. This deal could extend MGM’s online gaming reach to a total of 15 states in the US.

In short, MGM provides GVC Holdings with a path into the US market. As the press release noted, this agreement provides “a clear path to access in 15 states with total addressable population of 90 million.”

MGM Holdings also brings US market expertise to the table. GVC Holdings has extensive experience in the digital realm overseas and some US experience, but MGM is established here, has a known name brand, presumably knows the market more intimately and has access to a customer database of more than 30 million MGM Rewards members.

Yesterday’s press release also points to MGM’s “leading sports assets and relationships.” The MGM brand will be able to give the joint venture a major push in the US via its deep and varied relationships with sports teams and entertainment venues such as T-Mobile Arena, MGM Grand Garden Arena and the Mandalay Bay Events Center.

GVC Holdings brings critical digital experience to the table. MGM Resorts also has some experience in online gaming and marketing, but GVC Holdings is an absolute powerhouse in this area.

GVC operates some of the biggest online sports betting and gaming brands in the world. Coral, Ladbrokes, Sportingbet, Gala, partypoker, PartyCasino and bwin. These names may not hold a whole lot of weight in the US, but the GVC group as a whole generates revenues of over £3 billion per year and employs something in the range of 28,000 people.

The press release points to GVC’s experience in rolling out online sports betting and gambling operations in multiple markets (GVC is licensed in 20+ jurisdictions already) and state-of-the-art technology.

MGM and GVC Already Partnered in New Jersey

The MGM-GVC joint venture will not be the first time both companies have worked together in the US market. MGM and GVC are already partnered to run several NJ gaming sites including BetMGM, Party Casino, and Borgata Online.

All are licensed under MGM-owned properties in Atlantic City and are based on software provided by GVC Holdings. Apparently, both companies have found these prior partnerships fruitful enough to up the ante and collaborate on a major, multi-state online sports betting and gambling push in the USA.

In the press release, both companies said the commencement of the joint venture is subject to gaming regulatory approvals.