All in: America’s Caesars Entertainment Agrees to Buy UK Gambling Giant William Hill.
What’s the story?
Earlier this year, Caesars Entertainment struck a £2.9bn deal to take over William Hill. £2.9bn equates to 272p a share. Caesars already owned a 20% stake in Williams Hill’s US operations.
Caesars Entertainment is perhaps best known for owning Caesar’s Palace in Las Vegas. However, the American firm is particularly interested in William Hill’s bookmaking business, which currently has 170 branches across 13 states. Caesars chief executive Tom Reeg described the deal as “truly exciting.” This is understandable when you consider how drastically the gambling landscape has changed in America in recent years.
The American gambling market has boomed since the US Supreme Court struck down a 1992 Federal Law which prohibited states from legalizing sports gambling. This was decided in May 2018. Currently, sports gambling is legal in 20 states, with a further 6 states recently passing a bill which will see the practice become legal. It comes as no surprise as to why Caesars wants to strengthen its online gambling portfolio as this market is set to be worth $127bn by 2027.
The downside to this deal is that Caesars Entertainment is looking to sell William Hill’s UK assets. William Hill has more than 1,400 betting shops in the UK. Currently CVC and Apax are said to be interested in buying company’s European assets. I hope they are able to find a buyer in order to avoid any potential job losses.
How will this affect law firms?
The acquisition of William Hill represents an urgency to capitalise on what is fresh market. For law firms, this potentially means an uptick in acquisitions as seen in Caesar’s purchase of William Hill. Also, for firms who specialise in gaming laws (such as Gowling and Mishcon De Reya), this will be good news. For Mishcon, who are well renowned in gambling, tax, IP, and litigation will be well positioned to capitalise in an American market where they are already established.
We have also seen British gambling companies attempt to break into the American market. For example, GVC Holdings PLC’s (a client of Mishcons) recent joint venture with casino giant MGM Resorts, called ‘BETMGM,’ is live in 8 states. The British gambling giant is very optimistic about the venture, with new boss Shay Segev saying “the venture is making great progress towards being the leading operator in the US.” For firms with a presence in the UK and the USA, they will be well-placed to advice clients on entering the American market.
More broadly, firms will be able to capitalise on the reality that entering a new market takes money, so clients need to fundraise. Firms with expertise in fundraising will likely see an uptick of clients looking to raise finance in order to enter the American market through either an acquisition or as a solo endeavour.
Regarding Caesar’s intention to sell William Hill’s UK assests, this will require lawyers on behalf of Caesar and any potential buyer(s). Lawyers, on both sides, would be expected to, amongst many things, raise finance (on the buyers side), perform due diligence, negotiate the acquisition price, draft and negotiate contracts, and assess and gain regulatory approval.
I personally believe that Covid-19 will drastically affect Caesar’s ability to dispose of William Hill’s UK assets, despite the interest from CVC and Apax. Given the current surge online gambling, which saw William Hill announce a permanent closure of 119 stores, I wouldn’t bet on them finding a buyer anytime soon.
