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Casino operators rise after top court opens door for legalized sports gambling.

Shares of several casino operators and gaming stocks, including MGM Resorts (MGM), Boyd Gaming (BYD), and Caesars Entertainment (CZR), are on the rise after the U.S. supreme court struck down a federal law that bans gambling on sporting events in most of the country. Deciding a case brought by the state of New Jersey, the high court ruled a federal law called the Professional and Amateur Sports Protection Act is unconstitutional. PASPA UNCONSTITUTIONAL: In a 6-3 ruling, the Supreme Court has cleared the way for states to legalize sports betting, striking down a 1992 federal law that had prohibited most states from authorizing such wagering. New Jersey and then-Governor Chris Christie had challenged the federal law that required states to ban sports gambling, arguing that it violated the Tenth Amendment. On Monday, the court agreed by saying it violated constitutional principles limiting the federal government from controlling state policy. REGIONAL-BASED CASINOS THE WINNERS: Commenting on the U.S. Supreme Court's decision to rule PASPA unconstitutional, Jefferies analyst David Katz told investors he believes the winners are the strong regional-based casinos Penn National (PENN) and Caesars Entertainment, as well as the location-agnostic suppliers Scientific Games (SGMS) and International Game (IGT). Nonetheless, Katz pointed out that a roll-out on a state-level basis could require significant negotiation of tax rates, the integrity fees paid to sports leagues and overall regulatory structure, which could be the gating factor in the conversion of legality into earnings, which has been the case historically with most gaming proliferation. PRICE ACTION: In afternoon trading, shares of MGM Resorts, Boyd Gaming and Caesars Entertainment have gained 1%, 4% and 6%, respectively. OTHERS TO WATCH: Also higher following the news, Scientific Games and International Game advanced about 11% and 3%, respectively. Shares of team owners Madison Square Garden (MSG) and Liberty Braves (BATRA) also rose about 3% each. Meanwhile, shares of Las Vegas Sands (LVS) and Wynn Resorts (WYNN) are down about 1% and 2%, respectively.

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Publication:The Fly
Date:May 14, 2018
Words:327
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