Two gambling industry titans announced a merger Wednesday that has major implications for the nascent U.S. sports betting industry.
Caesars Entertainment and British bookmaker William Hill, a dominant player in the Nevada sports betting industry, said that Caesars will acquire William Hill in a deal worth £2.9 billion. The deal is subject to the necessary regulatory approvals. It’s expected to close in the second half of 2021.
William Hill reportedly was also faced with another takeover offer from the private equity firm Apollo Global Management, but Caesars ended up the winner of the bidding war. It was a wise move for William Hill, considering its existing relationship with Caesars.
Caesars snags a top player in developing U.S. industry
William Hill controlled nearly 10% of the U.S. sports betting market share in the first half of 2020, trailing only DraftKings and FanDuel with about 30% each. The idea is to try to make William Hill a more potent brand nationwide.
“The William Hill Board believes this is the best option for William Hill at an attractive price for shareholders,” said company Chairman Roger Devlin. “It recognizes the significant progress the William Hill Group has made over the last 18 months, as well as the risk and significant investment required to maximize the U.S. opportunity given intense competition in the U.S. and the potential for regulatory disruption in the UK and Europe.”
The competition is fierce. For example, Nevada, where William Hill is the dominant player, has already started to fall behind New Jersey. In August, Nevada saw about $474 million in sports gambling handle, far less than New Jersey’s nearly $668 million. New Jersey’s market is much more competitive than Nevada’s, and that’s going to be the case as more and more states legalize online gambling.
The combined company said it sees a U.S. online gambling market worth north of $30 billion.
The acquisition comes despite Caesars and William Hill already operating a U.S. joint venture for sports gambling. Under that arrangement, Caesars has 20% equity and William Hill has the rest. William Hill already runs online sports betting through Caesars’ properties, as well as retail sportsbooks inside Caesars’ properties. Caesars owns and operates 54 casinos in 16 states, many of which have legal sports gambling.
“Caesars believes that the current joint venture structure between Caesars and William Hill in the U.S. needs to be broadened in scope in order to fully maximize the opportunity in the sports betting and gaming sector and provide the best possible customer experience,” a presser stated.
Caesars expects that its enlarged sports and online gaming business in the U.S. could generate between between $600 million and $700 million in net revenue in fiscal year 2021, according to the presser.
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