IHS Markit: US gaming stocks soar on US Supreme Court decision
15 May 2018 New York
Image: Shutterstock
Stocks related to gambling in the US have received a jolt as the US Supreme Court ruled 7-2 to overturn the Professional and Amateur Sports Protection Act of 1992, which banned sports betting in states where it wasn’t already legal.
Sam Pierson, director of securities finance at IHS Markit, said in a company commentary the potential for a dramatic increase in sports betting caused some gaming-related stocks to pop in trading on 14 May.
He said: “While the news was positive for some, the concern that this may actually hurt sports betting in Nevada weighed on the casino stocks, though that impact was certainly more muted than the upside seen elsewhere in the group.”
The likelihood of an increase in legal sports gambling means that even if Nevada loses share that share may be coming from a much larger pie, he calculated.
The ruling was not great news for short sellers, especially those targeting Scientific Games Corp Pierson said.
Short sellers added 1.7 million shares to short positions over the last month, an increase of nearly 30 percent.
Pierson added: “With the price up more than 11 percent on 14 May, it’s likely that some of the recent short sellers have headed for the exit, at least for the time being, but the higher price may induce some short sellers to add or enter a new position.”
Short sellers covered 13 percent of their position in Boyd Gaming Corp in the month prior to the new ruling, as shares rallied off the year-to-date low on 2 April, Pierson observed.
That may have served to limit the reaction in the price today, which was up less than comparable stocks, though the price did advance more than 3 percent and are now back above where they started 2018.
Pierson also found short demand is down 25 percent since the start of the year.
“It remains to be seen how states will react to their newfound freedom, though this certainly opens the door to a large scale expansion of sports betting”, Pierson said.
Other likely beneficiaries identified by Pierson include the state of New Jersey, which had lobbied in support of legalised sports betting since Jon Corzine took up the cause as governor in 2009.
Sam Pierson, director of securities finance at IHS Markit, said in a company commentary the potential for a dramatic increase in sports betting caused some gaming-related stocks to pop in trading on 14 May.
He said: “While the news was positive for some, the concern that this may actually hurt sports betting in Nevada weighed on the casino stocks, though that impact was certainly more muted than the upside seen elsewhere in the group.”
The likelihood of an increase in legal sports gambling means that even if Nevada loses share that share may be coming from a much larger pie, he calculated.
The ruling was not great news for short sellers, especially those targeting Scientific Games Corp Pierson said.
Short sellers added 1.7 million shares to short positions over the last month, an increase of nearly 30 percent.
Pierson added: “With the price up more than 11 percent on 14 May, it’s likely that some of the recent short sellers have headed for the exit, at least for the time being, but the higher price may induce some short sellers to add or enter a new position.”
Short sellers covered 13 percent of their position in Boyd Gaming Corp in the month prior to the new ruling, as shares rallied off the year-to-date low on 2 April, Pierson observed.
That may have served to limit the reaction in the price today, which was up less than comparable stocks, though the price did advance more than 3 percent and are now back above where they started 2018.
Pierson also found short demand is down 25 percent since the start of the year.
“It remains to be seen how states will react to their newfound freedom, though this certainly opens the door to a large scale expansion of sports betting”, Pierson said.
Other likely beneficiaries identified by Pierson include the state of New Jersey, which had lobbied in support of legalised sports betting since Jon Corzine took up the cause as governor in 2009.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
