Caesars Entertainment announced on Wednesday it is buying British bookmaker William Hill for $3.7 billion.
Last Friday, William Hill said it got competing offers from Caesars and Apollo Global Capital. However, the gaming giant cautioned that their existing relationship could end if they chose the other offer.
Pending regulatory and anti-trust approvals, the deal is expected to close in the second half of 2021.
William Hill is a familiar name in New Jersey, but it has yet to make its entrance into Pennsylvania, which now has 10 online sportsbook operators.
William Hill and Caesars already were a pair
In June 2019, William Hill signed a deal with Eldorado Resorts to operate its sportsbooks. Eldorado and Caesars agreed to merge to create the largest US gaming company in a deal valued at $17.3 billion. The deal did not become finalized until July 2020.
In Pennsylvania, Caesars operates Harrah’s Casino Philadelphia. In New Jersey, Caesars Entertainment owns four of Atlantic City’s nine casinos. William Hill operates sportsbooks at three of them — Harrah’s, Tropicana and The Wild Wild West at Bally’s.
In what is being called a historic acquisition, sports betting and iGaming fueled the deal.
“The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect,” said Caesars Entertainment CEO Tom Reeg. “William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to serve our customers in the fast-growing US sports betting and online market. We look forward to working with William Hill to support future growth in the US by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting and entertainment.”
Roger Devlin, chairman of William Hill, commented:
“The William Hill board believes this is the best option for William Hill at an attractive price for shareholders. 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 US opportunity given intense competition in the US and the potential for regulatory disruption in the U.K. and Europe.”
Caesars sees growth
Caesars is bullish on the growth of sports betting and iGaming. It expects that an expanded sports and online gaming business could generate between $600-$700 million in net revenue in FY 2021 (on a pro-forma basis).
According to the recently released 2019/2020 Annual Report by the Pennsylvania Gaming Control Board, online casinos and sports wagering saw big gains in what was otherwise a rough year for overall gaming revenue due to COVID-19 shutdowns.
The reasons for the expanded partnership are various, but most prominent are maximizing potential, improving customer experience and increasing customer wallet share.
Caesars laid out its strategic rationale, which included:
- Shared wallet and unified experience across sportsbook and online casino.
- The growth of sports betting and iGaming, which some analysts estimate has a market size ranging up to $30-35 billion with the acceleration of gaming legislation at the state level.
- Caesars and William Hill currently operate a US joint venture with 20% and 80% equity ownership respectively. William Hill runs online sports betting through Caesars in each state. By broadening the scope of their partnership, they hope to “fully maximize the opportunity in the sports betting and gaming sector and provide the best possible customer experience.”
- By pairing with William Hill, Caesars is a more attractive partner for media companies. Currently, Caesars has a multiyear relationship with ESPN, and William Hill has a relationship with CBS Sports.
Caesars in Pennsylvania
Caesars Entertainment Corp., which owns Harrah’s Philadelphia, operates Caesars online sportsbook and an iGaming offering in Pennsylvania. The sportsbook ($-17,112) and online casino ($1.9 million) ranked last among all operators in PA for the 2019-20 fiscal year. But they were also late to launch — in March and April, respectively.
In August 2020, Caesars online sportsbook did post its highest-ever handle to date in PA with nearly $4 million. It brought in $220,116 in total revenue, its highest since November 2019. While it was an improvement, it was the second lowest of the nine operators with both retail and online sports betting.
William Hill will face an uphill climb in Pennsylvania. FanDuel has commanded at least 40% of the sports betting handle since arriving last summer. DraftKings has held tight to the No. 2 spot since arriving in the fall of 2019. Both have name recognition and continue to flood various forms of media with advertising.
Barstool Sportsbook, with its zealous founder Dave Portnoy, just arrived in mid-September.