Caesars Agrees £2.9bn William Hill Takeover
Sports betting firm William Hill has agreed to a £2.9 billion takeover bid from Caesars Entertainment. The deal means that the Las Vegas casino owner will take over William Hill and has outbid US private equity firm Apollo. Both the boards at William Hill and Caesars have agreed to a cash offer of 272p per share, although that is still subject to shareholders agreement.
Caesars Entertainment runs the world-famous Caesar’s Palace casino in Las Vegas. ©Marina Monroe/Pexels
Sports Betting Expands in the US
The future of William Hill has been a hot topic of speculation this week, especially since Caesars Entertainment confirmed that it was in advanced takeover talks with the company. Caesars Entertainment famously runs the Caesar’s Palace casino in Las Vegas, featuring lavish fountains and pools and extravagant Greco-Roman décor.
The over the top casino experiences offered by Caesars Entertainment are a far cry from the small betting shops William Hill runs in the UK. However, William Hill has one of the most sought after assets in American gambling at the moment. The British firm’s 56 years of sports betting experience are invaluable for the US’s emerging market.
The Supreme Court declared PASPA, otherwise known as the Professional and Amateur Sports Protection Act, unconstitutional in 2018. Since then, it has been up to US states to decide for themselves on whether they want to pass legislation legalizing sports betting. As a result, there has been a slow but steady rise in the number of states where sports betting has been made legal, with many more states still in the process of drafting legislation.
William Hill was one of the first UK gambling firms to capitalize on the emerging US sports betting market. As part of its strategy to gain a foothold in this market, it sold a 20% stake in its US operations to Caesars Entertainment. As part of this deal, Caesars gained the rights to operate sports betting through William Hill, but under its own brand name.
American private equity firm Apollo also spotted the value that William Hill has to offer the US sports betting market. It submitted a rival takeover bid, however that presented William Hill with problems immediately. Caesars Entertainment threatened William Hill that accepting Apollo’s bid would cast doubt on the future of their joint venture.
William Hill US was launched in 2012, through a merger with three sports betting operators. Now its US firm operates in 13 states via 170 retail operations. It is these venues that Caesars is particularly interested in. Tom Reeg, chief executive at Caesars Entertainment, has welcomed the opportunity to combine the two companies’ assets. Reeg stated:
“William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to better serve our customers in the fast growing US sports betting and online market.”
Roger Devlin, chairman of William Hill, has also been positive about the deal, describing it as the best available option at an attractive price. William Hill’s directors have also said that they will all recommend that company shareholders accept the deal with Caesars Entertainment.
UK Shops Face Uncertainty
Caesars has said that it will attempt to integrate William Hill into its own business with as few job losses as possible. The same might not be said for William Hill’s operations outside of the US. Caesars Entertainment plans to find alternative owners for William Hill’s non-US operations. This could mean uncertainty for the firm’s UK business.
The coronavirus pandemic has had a significant impact on William Hill’s UK operations, as months of lockdowns prevented high-street bookmakers from trading. Cancelled sports events also left bookmakers with few betting opportunities to offer customers. However, this period of uncertainty did see a shift in the market, as many bettors took their wagers online.
William Hill has said that it does not predict the number of customers returning to reopened betting shops to be as high as before the pandemic. William Hill currently operates around 1,500 betting shops in the UK, however it has warned that 119 of these will not be reopening.
While William Hill has long been a staple of the high street, it was already in trouble before the pandemic hit. The introduction of the £2 stake cap on fixed odds betting machines cut off a major source of revenue for its shops. Prior to this, the betting machines’ maximum stakes were set at £100.
A difficult road lies ahead for William Hill in the UK, as the government is expected to crack down further on gambling legislation. A review of the 2005 Gambling Act is incoming, and could include tough new rules in regards to advertising and stake caps.
William Hill’s position in the US looks far more promising. While the company is less of a household name to American bettors, it is in a good position to make the most of the emerging betting market. William Hill has experience in betting, something that most US gambling firms do not have. This has been the driving force behind the interest of bidders like Apollo and Caesars.
