Breaking Down The Caesars-William Hill Deal
Caesars Entertainment won a bidding war for UK bookmaker William Hill. According to the press release, Caesars will purchase William Hill for $3.7 billion, with the deal expected to close sometime in H2 2021, pending regulatory approval.
However, Caesars intends to offload William Hill’s non-US assets, significantly reducing the final price tag.
Per the press release:
“Caesars’ strategic focus remains on the opportunities immediately evident in the US market at this stage… In order to best maximize [William Hill’s non-US] propositions… following completion of the Acquisition, Caesars’ intention is to seek suitable partners or owners who have aligned objectives and approaches, and who will be focused on the longer-term ambitions of those businesses and for the benefit of its customers.”
Additionally, the two companies have an existing deal that provides William Hill access to online and retail sports betting through Caesars’ properties in select states. The agreement grants a 20% and 80% equity ownership, respectively. This arrangement helped Caesars beat out Apollo Global Management in the bidding war.
The Rationale for the Purchase
Caesars’ stated impetus is an improved sports betting experience and the creation of one-stop-shopping for its customers.
“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.”
Under the heading “Compelling Strategic Rationale,” Caesars cites the opportunity in the US sports betting and online casino space, stating: “Caesars believes that the sports betting and online gaming sector represents one of the largest areas of growth in the US gaming industry.”
Other factors cited in the press release include:
- Granting increased market access.
- A “unified customer experience” and a “more focused branding experience.”
- Providing William Hill with access to Caesars’ existing arrangements with sports teams and events.
- Leveraging Caesars’ relationship with ESPN and William Hill’s relationship with CBS Sports.
- Providing William Hill access to Caesars 60-million-strong database and the cross-sell opportunities that go with it.
What is Caesars Getting with William Hill?
One of the more exciting aspects of the deal is Caesars’ previously mentioned intention to sell off William Hill’s non-US assets. Those assets account for the bulk of William Hill’s business, as the longtime bookmaker is mostly unknown outside Nevada.
In effect, Caesars believes William Hill can be a competitive product anywhere in the US.
Anyone placing a sports bet in a Las Vegas casino is likely familiar with the William Hill brand. Still, outside of Nevada, William Hill is a relative unknown, evidenced by its lack of market share in other jurisdictions with legal sports betting in the US.
According to estimates from Eilers & Krejcik Gaming September Sports Betting Monitor report, William Hill’s New Jersey market share is around 6%, despite partnerships with three operators in the market – Tropicana, Ocean Casino, and Monmouth Park. Further, William Hill is the only brand offered by Tropicana (a Caesars property) and Ocean.
That said, if William Hill’s US results are underwhelming, Caesars’ non-William Hill sportsbooks are downright anemic. According to the E&K report, Caesars New Jersey market share is just .7%.
The decision to absorb William Hill despite a somewhat lackluster performance outside of Nevada is a good indication that Caesars has significant concerns about its current competitiveness in the US.
A New Era of Sports Betting in Las Vegas
Robert Walker of US Bookmaking brought up two fascinating points regarding the deal:
Either one of Walker’s points would fundamentally change sports betting in Nevada, and there’s a realistic chance both come to pass.
Steve Ruddock is the content director for BettingUSA and the Editor-in-Chief of Gaming Law Review.
Steve has covered the legal and legislative developments in the US gambling sector for more than a decade for online and print publications.
