Toronto-listed betting and gaming operator The Stars Group has agreed a landmark deal with casino operator Eldorado Resorts, paving the way for the operator to launch its brands in 11 additional US states.

The 20-year agreement grants The Stars Group the option to launch online betting and gaming in US states where Eldorado owns casino properties, subject to license availability, state law and regulatory approvals.

The Stars Group will have the option to own, operate and brand online sports betting, poker and casino offerings in each of the applicable states.

For sports betting, The Stars Group's options will provide first skin access in states where Eldorado operates more than one casino property, and second skin access in all other applicable states. 

William Hill US remains Eldorado’s exclusive provider for land-based retail sports betting and has consented to the company’s agreement with The Stars Group, and will share in the economics of The Stars Group transaction.

The deal currently covers 11 states (Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio, and West Virginia), which gives The Stars Group access to up to 13 states across the US following recent market access deals in New Jersey (Resorts Casino Hotel) and Pennsylvania (Mount Airy Casino Resort).

"We are excited to announce this agreement with Eldorado, one of the fastest growing regional gaming companies in the United States," said The Stars Group CEO Rafi Ashkenazi. "This agreement establishes the foundation for our US strategy as we tactically pursue access to other key states and opportunities with potential media partners."

As part of the agreement, Eldorado will receive a revenue share from The Stars Group’s operation of the applicable offerings, and will be issued with 1m common shares in The Stars Group, at a price of $23.22 per share for a value of $25m. An additional $5m of shares will be issued upon The Stars Group's exercise of the first option and following the satisfaction of certain conditions.

In addition, Eldorado will be entitled to further shares in The Stars Group at a price of $23.22 per share in five years time. The number of shares would be solely based on the success of The Stars Group's online gaming offerings in applicable states, as measured by net gaming revenue generated in each state.

"The Stars Group is one of the world's largest, most licensed and most geographically and product diverse publicly listed online gaming companies,” said Eldorado chairman and CEO Gary Carano. “We are excited to work with The Stars Group to capitalize on their proven ability to leverage their products to gain share in the growing market for online gaming."

Shares in The Stars Group Inc (TSX:TSGI) closed up 1.72 per share at CAD$25.44 per share in Toronto Friday, while shares in Eldorado Resorts Inc (NSQ:ERI) closed at US$35.85.

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