Why a US Casino Giant is Betting Big on a famous British name
Is one of the most recognised names on the British high street about to be swallowed up by an American gaming colossus? It certainly looks that way, as Caesars Entertainment – which operates Caesars Palace in Las Vegas among other iconic locations – prepares to finalise its mammoth £2.9 billion takeover of William Hill this year.
The merger was given the go ahead in December when it cleared the antitrust waiting period (a mandatory amount of time that’s given to federal agencies to vet mergers for potentially violating competition laws). If all goes according to plan, it’ll certainly be a historic moment for the betting industry. After all, William Hill is one of the oldest and best-known brands in the business, being founded in 1934 by the bookmaker William Hill (he was indeed a real person) and operating more than 1,400 betting shops in the UK.
Not that the British side of operations matters all that much to the company’s prospective new owners. Caesars Entertainment has said that it intends to sell off the non-US part of William Hill’s empire so that it can be laser-focused on the American sports betting industry, which has exploded since a change in federal law in 2018.
It was in May of that year when, following heated anticipation, the Supreme Court struck down the Professional and Amateur Sports Protection Act, better known as PASPA. Signed into law by President George HW Bush back in 1992, PASPA outlawed sports betting in all but a few states (most notably, Nevada). This was all for the best as far as the major US sports leagues were concerned, as they viewed gambling as a potentially corrupting influence on sport. The problem was, sports betting carried on happening anyway. It just happened to be illegal, which meant that customers had no protections and millions in tax revenues was being lost.
In 2014, Adam Silver, boss of the National Basketball Association, wrote a now-famous article in the New York Times which drew attention to the issue. “Despite legal restrictions, sports betting is widespread,” he wrote. “It is a thriving underground business that operates free from regulation or oversight. Because there are few legal options available, those who wish to bet resort to illicit bookmaking operations and shady offshore websites.”
Silver’s article captured the changing mood, highlighting the “obvious appetite among sports fans for a safe and legal way to wager on professional sporting events.” This appetite was finally able to be satisfied when PASPA fell in 2018, and states were allowed to decide for themselves whether to legalize sports betting or not.
William Hill was in a good position to take advantage of the changes that took place after PASPA, having already set up operations in Nevada in 2012. It lost no time setting up land-based and online sportsbooks in states like New Jersey, Indiana and Iowa, and this American wing of William Hill has continued to thrive even in the midst of the coronavirus pandemic. While figures show total, global revenue for the company dropped by 16% in 2020, its US business actually shot up by 32% through the course of the year, partly because casino closures propelled more people to online sports betting. It’s no wonder, then, that the bigwigs at Caesars must be rubbing their hands at the thought of taking over the company. William Hill’s CEO Ulrik Bengtsson recently commented on this, saying the takeover “recognises the substantial progress we have made, as well as the opportunities and challenges ahead of us.”
While Caesars is a towering entity in the casino gaming space, acquiring William Hill – in which it already has a 20% stake – will help consolidate its presence in sports betting. After all, William Hill has almost a century of experience in the industry, giving it a head start in the youthful and hyper-competitive US betting market. As Caesars CEO Tom Reeg puts it, “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.”
There’s certainly a lot to play for. The end of PASPA effectively fired a starting pistol on a new gold rush, as various companies like DraftKings and Flutter have aggressively tapped this vast new reservoir of revenue. A new report by JP Morgan is a reminder that this is only the beginning. The investment bank believes that the sports betting market in the US may surge to $9.2 billion by 2025, and says that “media networks are only scratching the surface when it comes to the value they can drive for betting platforms”.
The JP Morgan report highlights how there are plenty of opportunities to integrate gambling into live sports broadcasts. By further associating their trusted brand names with betting sites, media companies like ESPN and CBS are sure to further legitimise gambling in the public’s eyes, making it more mainstream and helping inspire more customers to have a flutter.
Such moves are already being made, of course. Last year, NBC Sports signed Australian sportsbook PointsBet as its official betting partner in a deal worth hundreds of millions of dollars. The deal grants PointsBet prime advertising real estate across NBC Sports’ multi-platform coverage of events like the National Football League and the Olympics. ESPN, meanwhile, launched a YouTube channel entirely focused on sports betting. It also signed a partnership deal with Caesar Entertainment, the terms of which included having William Hill’s betting app appearing on ESPN’s web and mobile platforms. This was yet another milestone for William Hill, with CEO Ulrik Bengtsson hailing the fact that “Tens of millions of fans will now have a direct link to our sports betting apps and odds. Giving ESPN users this access will accelerate our leadership as we continue to expand in the US.”
The JP Morgan report makes the important point that the market may soar to even greater heights if and when some powerhouse states roll back the restrictions they currently still have in place. A glaring example is New York, where bets can currently only be made at physical casinos. There’s been growing momentum in favour of unleashing online sports betting in the state, with Governor Andrew Cuomo recently declaring that “New York has the potential to be the largest sports wagering market in the United States, and by legalizing online sports betting we aim to keep millions of dollars in tax revenue here at home.”
Excitement over Cuomo’s support for online betting has been somewhat dampened by his clear support for a state-run model, and his statement that “I’m not here to make casinos a lot of money, I’m here to raise funds for the state.” However, if multiple licenses are indeed given out to private companies then it really will be yet another potential windfall for players like Caesars Entertainment.
With the William Hill acquisition potentially completing this financial quarter, it looks like the burgeoning population of sports bettors in the United States will be more spoilt for choice when it comes to ways to wager in the coming months and years. Investors, too, will be eagerly eyeing up opportunities to buy into betting sites, gaming software developers and other associated firms.
It’s all a far cry from the days of William Hill himself, who got his start by riding around on his motorcycle to take bets in Birmingham. But, while he may never have imagined the ritzy, tech-fuelled new world of sports betting, the company bearing his name will soon be even more famous when Caesars inks that deal.
