(Reuters) - GVC (GVC.L), owner of British gambling firm Ladbrokes, raised its annual core earnings forecast for the second time in three months as a joint venture cashed in on a booming online sports betting market in the United States.
British gambling companies have been expanding across the Atlantic after stricter regulations at home cut the maximum stake allowed on high-speed slot machines - dubbed the “crack cocaine” of gambling by critics - to 2 pounds from 100 pounds.
Isle of Man-based GVC, which has a joint-venture with U.S. hotel and casino operator MGM Resorts International (MGM.N), said it had seen a good start to its BetMGM mobile app launched in September in New Jersey.
The company now expects full-year core earnings in the range of 670 million pounds ($818.07 million) to 680 million pounds, as it suffered a smaller than expected hit to U.K. betting shops from tighter regulation and revenue from online gambling rose.
Shares in the company rose 4% to 779.6 pence by 0747 GMT.
“The company’s fortunes seemed to have turned around since reporting half year results in August when it said the full year should be better than expected,” AJ Bell Investment Director Russ Mould said. “True to its word, its latest trading update confirms that business is going swimmingly.”
GVC, whose brands also include Coral, bwin and Foxy Bingo, said in August it expected core earnings to be in the 650-670 million pounds range.
Foreign markets have been a boon for firms like GVC, as more U.S. states allow legal online betting and other countries offer softer rules on gambling than in Britain. GVC said it shut an additional 41 shops in the quarter in Britain.
“We continue to view U.S. sports betting as a game changing opportunity for the GVC and its peers, with GVC well placed given its partnership with leading casino group, MGM,” Shore Capital analysts said
Capitalizing on the potentially huge U.S. market, Flutter (FLTRE.I), the owner of Paddy Power Betfair, last week agreed to buy the company behind Poker Stars in a $6 billion share deal to create the world’s largest online betting and gambling company by revenue.
GVC also said it expected to appoint a new chairman before the end of the year to replace Lee Feldman who will step down to comply with the U.K. corporate governance code’s limits on tenure.
Reporting by Tanishaa Nadkar in Bengaluru; Editing by Bernard Orr and Deepa Babington