over 3 years ago • 2 mins
Never let it be said Caesars Entertainment isn’t merciful: the hotel and casino giant offered $3.7 billion to take over British gambling company William Hill on Monday 🎰
Caesars – hot on the heels of a merger with Eldorado Resorts that made it America’s biggest gaming operator – is now looking to conquer the US sports betting market. The company thinks buying William Hill will help it do just that, but it’ll need to be every bit as shrewd as its namesake to succeed: Caesars will have to outdo private equity firm Apollo Management, which announced its interest in buying William Hill on Friday.
The US Supreme Court banned sports betting (outside Nevada) in 1992 and effectively outlawed online gambling in 2006, but new rulings in 2018 started to reopen the market across the country 👩⚖️ The online casino and sports betting markets are now expected to be worth $18 billion a year by 2025 as more and more states legalize the practice. Caesars, then, will hope to benefit by doubling down on its existing partnership with William Hill in the 18 states where sports betting is currently legal – taking its market share from a projected 12% to much, much higher.
The shares of a company usually fall after it announces an acquisition, which reflects the risk that it’s paying above the odds, or that the deal won’t pan out as hoped. But Caesars Entertainment’s stock initially rose on Monday, suggesting investors think it’s right on the money 👍 William Hill’s stock, on the other hand, fell. Here’s why: when Apollo made its acquisition plans known on Friday, William Hill’s share price rose 40%. But Caesars’ offer was only 25% higher than William Hill’s share price was on Thursday. And since Caesars believes the British firm will accept its offer over Apollo’s, investors hoping for a profit-boosting bidding war will have been disappointed.
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