BlueBet (ASX:BBT) share price drops 14% on US blow

This sports betting company’s shares are dropping today…

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The BlueBet Holdings Ltd (ASX: BBT) share price is under significant pressure on Monday morning.

At the time of writing, the mobile sports betting company’s shares are down 14.5% to $2.11.

Why is the BlueBet share price falling?

Investors have been selling down the BlueBet share price after the company was dealt another blow with its US expansion plans.

According to the release, on advice from the regulator, Virginia Lottery, BlueBet has withdrawn its application for a Sports Betting Permit in the US State of Virginia. All application fees will be refunded.

The release advises that this decision follows an exhaustive licence application process comprising 18 applications for only five available permits.

One positive is that the Virginia Lottery has formally notified BlueBet that it was not deemed ineligible for a permit. As a result, the withdrawal of BlueBet’s application at this stage will not prevent it from applying again in the future.

Management advised that during the application process the BlueBet Board received advice from the regulator that licenses would, at this stage, be granted to operators which had experience in other states and have equity interest owned by minority individuals or minority-owned businesses.

This is the second time in the space of a week that BlueBet has missed out on a licence. Last week it revealed that it wasn’t selected for one of the ten licences being made available in the state of Arizona.

What now?

This isn’t the end of the road for BlueBet in the US by any means. As part of its two stage US entry strategy, BlueBet identified up to five priority states for licences.

Following its recent success in Iowa, the Board’s current targets remain Colorado, Tennessee and Maryland.

It also notes that there are ten states where sports betting is legal but not yet operational and these are all being reviewed and assessed against BlueBet’s entry criteria.

Furthermore, it highlights that industry commentators see up to 40 states legalising sports betting by 2023. This compares to the current 21 states where it is live and operational.

In light of this, BlueBet sees considerable scope to complement its licence in Iowa.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BlueBet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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