Caesars and William Hill Begin Discussion to Combine Sports Betting & iGaming Divisions

Combine Sports Betting & Igaming Divisions

  • Talks follow recent news of Caesars and Eldorado’s mega-merger
  • The strategy is directed toward intertwining iGaming and sports wagering operations
  • Goals are forecasted toward creating greater value and stockholder interest

Caesars Entertainment is reportedly initiating talks about another merger after a recent acquisition that created the largest domestic gaming company counted by the number of properties. In this venture, the company aims to combine its online casinos and sports wagering operations with the US business unit of William Hill.

The news follows almost immediately after the huge completed merger for Caesars with Eldorado Resorts.

The project began when Wolfe Research analyst Jared Shojaian floated the idea of Caesars and William Hill forming a 50/50 joint venture for the former’s iGaming and sports wagering segment, whereby each company would own 40 percent and the remaining 20 percent would be sold to public investors.

William Hill CEO Joe Asher would disclose few details at this early juncture other than confirming the company is in talks with Caesars.  He did go on to briefly say to Bloomberg News:

There’s a lot of opportunity in there, and we think that we’ve got some really powerful assets in this space, so obviously it’s an ongoing subject of discussion.

Under the terms of a pact formed two years with the company then known as Eldorado Resorts, the British bookmaker would be responsible for running the gaming company’s sportsbooks, with the casino giant receiving 40 percent of the economics from that arrangement and a 20 percent stake in William Hill’s US unit.

Both Caesars/Eldorado & William Hill on the Move

Despite the lull in the business world involving the pandemic and Covid-19, Eldorado is making stunning news moving forward in the casino sector.

The company is only six weeks away from finalizing its $17.3 billion takeovers of Caesars, a deal in which the buyer took the target’s name. In other news last week, William Hill also completed its purchase of CG Technology’s (CGT) Nevada operations.  A company that has previously suffered through a history of fines and legislative threats from the Nevada Gaming Control Board.

Keeping score of the recent transactions, the sportsbook operator adds sportsbooks at well-known Las Vegas destinations including the Palms, Tropicana, Cosmopolitan, and the Venetian.  Through Eldorado’s purchase of Caesars, William Hill also obtains access to the world-famous Caesars sportsbook.

The deal also has ramifications in New Jersey as well, with William Hill’s foothold in Atlantic City.  Overall, according to Bloomberg, it brings their dominant industry total to 170 total books in 13 U.S. states.

Totaling the Value $

It is likely both steps were intertwined with perhaps other actions to come from Caesars Entertainment. Last month, Caesars CEO Tom Reeg said a “permanent solution” for the company’s iGaming and sports wagering business could be revealed by the end of this year.

Both William Hill’s US operations and Caesars’ internet/sports casino unit have something in common. Opportunity for major growth and in the estimation of most financial analysts, the chance to appreciate.  It has been estimated by some to increase toward $600 to $700 million in revenue in 2021.

Joining the two enterprises together and then selling a stake to the public could be an avenue to create shareholder value for units that markets are not appropriately valuing.    Shojaian, the Wolfe Research analyst, says that based on that target $600 million to $700 million online gaming/sports betting revenue forecast for 2021, a combination and then spin-off with William Hill would be worth approximately $7 billion.

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