The information about the biggest mergers of gambling companies is always available in daily business news. But which of them were the most important and key for the gambling industry?
Read this article and find out about the most significant mergers of companies, which operate in the gambling market, and their impact on the industry.
Caesars Entertainment and William Hill
Caesars Entertainment is a giant of the gambling industry, which has got the title of the fourth-largest gaming business in 2013. The company has over fifty casinos and continues to develop via acquisitions to cover new markets.
In April 2021, Caesars announced the completion of the acquisition of William Hill – one of the biggest betting operators in the UK and worldwide. Here are the key facts about the firm:
- The bookmaker’s market price is more than two billion dollars.
- William Hill’s revenue for 2020 was 1.79 million dollars.
- Operating income – 77.36 million dollars (2020).
- Net gaming revenue was estimated at approximately $69 million in 2020.
The William Hill executives decided to accept the deal by unanimous consent. One of the reasons for such a unanimous decision is the impact of the pandemic on the business. The bookmaker couldn’t restart the operation of 119 betting shops because of not being sure whether the number of customers would remain the same as before the pandemic. The reason for this is a mass shift towards online betting, which has begun during the lockdown.
It is worth mentioning that Apollo – a US-based asset management firm – also participated in the bid for William Hill. However, Caesars could battle the rival and acquire the William Hill assets for four billion dollars. The casino company’s takeover of the British bookmaker confirmed its plans concerning expanding to more markets in the US, including the sports betting vertical.
The merger of companies has resulted in the operation in eighteen states where sports betting isn’t prohibited by the law.
Caesars Entertainment and Eldorado Resorts
Another “couple” worthy of attention in gambling mergers is Caesars Entertainment and Eldorado Resorts. The merger of these two companies allowed them to create the largest casino business in the United States. A $17.3-billion deal strengthened the presence of Caesars in the US gaming market. The merger resulted in the company’s ownership of properties across sixteen states. The alliance owns fifty-five casinos, including the US and international ones.
The COVID-19 pandemic also was a key factor in this deal. Eldorado Resorts needed to sell several of its properties at a reduced price before the merger. The deal allowed both companies to strengthen their positions in the market by joining their forces.
The Stars Group and Flutter Entertainment
The Stars Group – a gambling company headquartered in Canada – became a part of Flutter Entertainment – one of the biggest Irish bookmakers. The merger was based on the condition that The Stars Group got shares of Flutter. As a result, in the consolidation, The Stars Group is the owner of 45.36% of the share capital, and the acquiring company has 54.64%.
Flutter’s subsidiary companies include already established brands:
- FanDuel;
- Paddy Power;
- Betfair;
- Sportsbet Australia.
The acquisition of The Stars Group added more assets to Flutter’s list. It became the owner of a world-known poker room PokerStars and UK gambling company Sky Betting & Gaming.
The aim of the merger was the creation of the biggest betting company in terms of revenue. The Stars Group reported total revenue of $2 528 448 in 2019. Flutter generated $1.36 million in revenue for the same period. The expected annual revenue of the combined company was $4.7 billion. The merger was estimated at $14.82 billion.
The acquisition started in October 2019 and lasted till May 2020. More than ninety percent of shareholders of the Flutter and TSG companies cast an affirmative vote for the deal.
SBTech and Draftkings
2020 was also marked by the merger of two sports betting companies – SBTech and DraftKings. SBTech is a provider of sports betting software, operating in the market since 2007. The company provides software solutions for more than fifteen regulated betting markets across the globe. DraftKings is a sports betting operator with a focus on daily fantasy sports bets. The company has established itself as one of the leading providers in the daily fantasy sports market since its launch in the US, competing with another key player – FanDuel.
The terms of the merger agreement resulted in the implementation of the SBTech solutions into the DraftKings products. The latter acquired the software provider for 3.3 billion dollars. However, it was an acquisition with three sides. Diamond Eagle acquired DraftKings and SBTech for $2.10 billion and $634.1 million, this allowed the combined company to enter the Nasdaq exchange under the name of DraftKings.
In 2021, the merger was actively discussed as the Securities and Exchange Commission initiated the investigation of DraftKings, namely its acquisition of SBTech. The reason for this was accusations brought by Hindenburg Research – an investment research company – against SBTech. The company stated that SBTech was connected with illegal actions – organized crime, money laundering, and participation in the black market. According to the report from Hindenburg Research, the software provider was involved in illegitimate gambling in several countries.
The statement caused a dramatic drop in DraftKings’ stocks. The company, however, claimed that the report was created by the competitors, which were interested in the fall of the value of its shares. The DraftKings representatives were insisting that before the deal, the company conducted a complete investigation regarding SBTech, and were satisfied with its results.
Barstool Sports and Penn National Gaming
Speaking about mergers and acquisitions, it is important to mention the deal between Barstool Sports and Penn National Gaming. Barstool Sports – is a media firm oriented toward sports content. Penn National Gaming is one of the biggest gambling companies in North America. It is focused on land-based and online services in the casino and sports betting sectors.
Penn National Gaming has acquired thirty-six percent of the company ownership for 163 million dollars. Under the agreement, the operator has the right to increase its share of Barstool Sports to fifty percent by paying sixty-two million dollars.
The acquisition of a media platform allowed the operator to use its services for its purposes. It was a strategic step for Penn National as it was intended to use Barstool Sports for generating the traffic for its casinos and sports betting application.
According to the announcement from the company chief executives, they had plans to launch Barstool Sportsbook and it was executed. In 2020, Penn National Gaming released the application for the iOS, Android platforms as well as a desktop version in Pennsylvania. The company continued to extend the reach of the sportsbook in 2024, covering other US states where it was legal.
Bet.pt and GVC
If to consider the other successful merging of gambling businesses, Bet.pt and GVC are a good example. GVC Group, which has rebranded into Entain, is one of the most influential gambling companies in the global market. The company is listed on the London Stock Exchange and owns the two biggest betting businesses in the UK – Ladbrokes and Coral.
The acquisition of Bet.pt was a part of the GVC’s plan for the Iberian Peninsula. The market was expected to generate revenue of 529 million dollars by 2023. Bet.pt was one of the pioneers in the Portuguese sports betting sector. The firm started its operation and got its first license back in 2016. The operator could succeed in the market and reach the leading position there. It is worth mentioning that the platform was launched based on the SBTech solutions.
GVC assessed opportunities of the market and potential of the local sports betting operator and scored a deal to the value of 57 million dollars. The company had a successful performance in 2023 marked by the growth of GGR in the online sector and increased revenue across all the markets where it operated. This allowed GVC to consider the expansion of its coverage. Bet.pt became one of the best options for reaching the market of Portugal.
888 Holdings and William Hill
Companies acquiring smaller firms don’t create such a sensation as a merger of two gambling companies that have already established themselves as the market leaders. The deal between 888 Holdings and William Hill International became the hottest topic to discuss. 888 acquired the British bookmaker’s non-US businesses for three billion dollars. To close a deal, the company outbid its rival – Apollo – in the race for William Hill’s assets. Under the agreement, it has got an official right to use the William Hill brand in all territories except for the United States as Caesars Entertainment remains the owner of the bookmaker’s US businesses.
The 888 representatives have confirmed that they aren’t going to close William Hill’s retail shops as they are stable and profitable despite the pandemic and shift toward online services. 888 Holdings has a positive opinion about betting shops and considers them as an integral part of the bookmaker. The company CEO confirmed that the alliance with a reliable and reputable operator would help to endure the upcoming regulatory changes. As the reforms were planned to touch upon casino services, the deal with a bookmaker was a way to reduce risks and secure profit.
Flutter Entertainment and FanDuel
Flutter’s interest in FanDuel – US-based gambling and sports betting services provider – appeared in 2018 when it bought fifty-eight percent of the company’s stakes. It was one of its main acquisition targets. In 2020, Flutter continued its story with the American business and increased its percentage of FanDuel’s shares to ninety-five. The other five percent belong to the US casino corporation Boyd Gaming. The value of the deal was $4.2 billion but it increased the value of FanDuel to $11.2 billion. According to the Flutter CEO, the acquisition of the American fantasy sports firm is fuelled by the desire to increase the share of the US market.
In 2021, there were rumors that Flutter was going to represent FanDuel as an autonomous enterprise on a US exchange. The news became a surprise for market analysts as FanDuel was Flutter’s trump card. The acquired company wears the title of a key US market stakeholder in the sector of sports betting. FanDuel owns forty percent of the market share.
It is important to mention the situation, which has happened during the first Flutter’s purchase of the fantasy sports operator. It cost Flutter $550 million to get the controlling stake of the company. However, the situation was tricky as a little bit earlier the law, which banned sports betting in the country, was lifted. This boosted FanDuel’s price to approximately eighteen billion dollars.
Later, Fox Corporation brought the case to the court, demanding its piece of the FanDuel pie for the same money that Flutter bought it. The company wanted to obtain an 18.6% share of FanDuel for eleven billion dollars. The Flutter representatives stated that those interested in the acquisition had to pay a “fair price”, which would be set by initial public offering. However, FanDuel’s getting into an IPO met too many obstacles on its way. The legal dispute with Fox Sports is one of the obstacles. Another reason is a legal fight with a co-founder of FanDuel.
Although circumstances are difficult, Flutter still cherishes hopes that an IPO is possible in 2024. The market analysts say that the implementation of this plan requires the resolution of the controversy with Fox Sports, first. Of course, the resolution should be in favor of Flutter. This will allow the company to secure money for an IPO.
The legal battle with the founder of FanDuel is one more problem that should be solved. Nigel Eccles started litigating with Flutter after the episode with the first acquisition when FanDuel was underpaid. Now the company creator is fighting for millions of dollars, which he has lost.
2020-2024 were important years for the industry in terms of big mergers in gambling and smaller companies teaming. Operators and companies that cover the majority of markets still want to expand and take over smaller businesses. This signalizes that the market participants should be ready for new influential alliances in 2024.
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