William Hill and Caesars Entertainment: merger or not a merger?
William Hill and Caesars Entertainment: merger or not a merger?
Will William Hill and Caesars Entertainment merge soon? There have been rumors for weeks that the US division of the British bookmaker could be bought by Caesars Entertainment. But now there is increasing evidence that this merger will not take place. The reason could quite simply be that Caesars Entertainment would like to use the available resources for other purposes in the current economic situation. The British bookmaker William Hill and the American casino operator Caesars Entertainment have intensified their cooperation in recent months. William Hill has the opportunity to penetrate Caesars Entertainment’s entire sports betting business. In concrete terms, this means that William Hill will soon serve 29 percent of the American market. The cooperation with Caesars Entertainment is already considered a great success. However, it could well happen that the much larger company Caesars Entertainment at some point comes up with the idea of buying William Hill.
William Hill and Caesars Entertainment work together
A merger of the two companies would probably be a good thing for Caesars Entertainment in terms of content. William Hill shareholders would also benefit from a purchase. But both William Hill and Caesars Entertainment have indicated that a merger is not currently an issue. The reason for this is that Caesars Entertainment would have to go to great lengths to legally enforce the merger. A takeover company would probably have to be founded in order to bring about the merger of the groups. Basically, Caesars Entertainment has the economic prerequisites to handle a large merger. But the current economic situation is not easy for casino operators either. It is not certain that the gambling industry will recover very quickly. So while the crisis is still going on, it is probably not a bad idea to have reserves for bad times. In a year or two years, it is still possible to merge with William Hill, but then under better conditions. In the meantime, both companies are benefiting from the intensive cooperation.
For William Hill, the US business is the most important and greatest opportunity in years to take the share price and the company as a whole to a whole new level. In the UK, home market, William Hill has been very successful for many years. But in the end the bookmaker had to accept some setbacks. In the European Union, William Hill is generally well positioned, but business is getting tougher as regulation becomes stricter in many countries. Therefore, for economic reasons, it is important for William Hill to gain a foothold in the USA and work successfully. The cooperation with Caesars Entertainment is an important milestone for William Hill. However, it should be perfectly clear that William Hill cannot keep up with the size of the big gambling companies in the USA. Caesars Entertainment and various other corporations have made fortunes over the past few decades with huge casinos in Las Vegas and other major casino locations. The core business of William Hill, however, has always been the stationary bookmaker business. In the last decade, online sports betting and online gambling have also become important. A great advantage for Caesars Entertainment is that William Hill have extensive expertise in sports betting and gambling, both online and offline. The online business in particular should benefit significantly from the cooperation with Caesars Entertainment. In the USA it has been possible to offer online sports betting and games of chance for a number of years. So far, this only applies to some states.
Growing together in the US market
Whether a merger will come or not cannot be conclusively clarified. Caesars Entertainment may well make the decision to take over William Hill entirely in the near future. In any case, Caesars Entertainment and William Hill will grow together in the US market over the next few months and years. The sports betting business, like the casino business, is to be boosted significantly by numerous licenses for online providers. The cooperation with Caesars Entertainment makes it very easy for William Hill to enter the sports betting business in the USA, as it is not necessary to acquire new licenses. Rather, with the licenses from Caesars Entertainment, William Hill can immediately enter the end customer business. This is a huge advantage for reasons of time alone. Although the sports betting market is pretty decent compared to the US online casino market, there is still huge potential for growth. There are currently only a few states that fully allow sports betting on the net. But most experts assume that more than 30 states in the USA will soon fully allow online sports betting. When that happens, vendors who already have strong businesses in other states will have a significant advantage. William Hill has been active in the USA for a number of years, but it was only through the cooperation with Caesars Entertainment that the expansion really took off.
It is extremely important for Caesars Entertainment to make the online business a large part of the company as a whole over the next few years. In the last few months it has been shown that a company that is dependent on income from land-based gambling can end up at a considerable disadvantage in certain crises. Probably not every investor in the gambling industry was aware of this. The opportunity is good to invest in online gambling and online sports betting. The cooperation with William Hill came about regardless of the current situation. But Caesars Entertainment could benefit in the long term from the fact that the right course was set at an early stage. At the moment, no one knows for sure what size the American online gambling market will be in a few years. Much depends on which states decide to implement gambling regulation. But it is already clear that the sports betting business in particular is becoming a huge number in the USA. The current situation is already favorable for Caesars Entertainment and from pole position, Caesars Entertainment could become the largest betting company in the USA through the cooperation with William Hill. There is still a long way to go, but the conditions are good. In this way it could well happen that Caesars Entertainment at some point integrates William Hill or at least the US subsidiary of William Hill into its own group via a merger.
William Hill buys major competitors
William Hill recently announced that the acquisition of CG Technology has been completed. This is an important milestone for the British bookmaker. The market share is increased through the purchase of the direct competitor. Caesars Entertainment also has the option of offering sports betting in numerous casinos in Las Vegas. William Hill in Nevada is already the largest betting company. Nevada, however, is one of the states in the US that are generally quite open-minded about online gambling. In other states, it should be a little more difficult for William Hill to celebrate similarly great successes. But there can be no doubt that there is a lot going on in sports betting. There are now some major American television networks that have entered the sports betting business. This also shows that there is a high probability that the sports betting market will grow to a considerable size. Anything else would also be astonishing, because so far it has only been legal reasons that have prevented the sports betting market in the USA from growing. The demand for sports betting is also high among American sports fans. In this respect there are surprisingly few differences worldwide. When sports betting is available, there is a need for it. This applies to Europe, Asia, Australia, Africa and of course also to North and South America. Sports betting providers existed in some states in the past. But online sports betting has only recently become available in the US.
William Hill brings extensive expertise and a lot of experience from Europe to the USA. This could prove to be an important advantage not only in online sports betting, but also in online gambling. The combination of an experienced online provider from Europe and a financially strong casino group from the USA is rated very positively by many experts. There is still a good opportunity for investors to join William Hill and Caesars Entertainment. Due to the difficult situation in the last few months, the share prices of the two groups are significantly lower than a year ago. That could change significantly if the cooperation takes place as desired. Some analysts even believe that the recently rising share price of William Hill must still be interpreted as a signal that William Hill will soon be taken over by Caesars Entertainment. But in our opinion, nothing will happen in this regard, at least in the next few months. However, the Caesars Entertainment board of directors may at any time adjust the strategy and decide that William Hill could be valuable for the future not only as a partner but as part of the group. If the time comes, it will certainly cause William Hill’s share price to rise significantly again. We do not want to make any investment recommendations at this point, especially not for the traditionally rather volatile gaming providers. But the fact is that many gambling company stocks are currently available at amazingly affordable prices. Should the gambling market recover completely after the health crisis and continue to grow, especially in the USA, an investment could be considerably worthwhile.