William Hill PLC (LON:WMH) has become the latest UK bookmaker to make a serious move into the burgeoning US sports betting market.
Earlier this morning, the FTSE 250-gaming group unveiled a tie-up with Eldorado Resorts – the multi-billion dollar, Nasdaq-listed casinos operator.
READ: William Hill makes big move into the US
As part of the 25-year deal, William Hill will give Eldorado, which owns 21 properties across eleven states, US$50mln in shares plus a 20% stake in William Hill US.
In return, William Hill will open sportsbooks in Eldorado’s casinos, with five set to launch “within weeks”. Plans are also in place to build a website and app to capture the growing online audience.
The move coincides with the US Supreme Court’s decision earlier this summer to let individual states choose if they want to maintain the ban on sports betting or not.
Since 1992, that decision had been made for them, with the practice illegal in all states except for Nevada.
All the big guns are Stateside
With the Supreme Court taking a step back, analysts reckon that 32 states will probably allow sports betting within five years.
That has led to a land grab among the UK’s biggest bookmakers, widely seen as some of the most established in the world.
Shortly after the court’s announcement, Paddy Power Betfair PLC (LON:PPB) agreed to buy popular fantasy sports site FanDuel, while Ladbrokes and Coral owner GVC Holdings PLC (LON:GVC) recently entered into a US$200mln joint venture deal with Las Vegas-based casino giant MGM.
The reason for the rush is the sheer size and potential of the US betting market.
The American Gaming Association reckons that Americans illegally wager about US$150bn on sports each year and the regulated bookmakers and online casino operators are obviously angling to grab a large slice of that market.
Tough times for UK bookmakers
The push across the pond also comes at a time when UK gambling companies are coming under increasing pressure in their home market amid tighter government regulation and a shift to online gaming.
A crackdown on the amount which can be wagered on the lucrative fixed-odds betting terminals, dubbed the ‘crack cocaine of the betting industry’, has hung over the sector, and last month William Hill shares dropped after it reported weaker-than-expected trading in the UK.
Given the headwinds, the UK gambling sector has seen a flurry of deals in recent years as companies look to engineer growth in any way possible.
Paddy Power merged with Betfair in 2016, while Ladbrokes completed its merger with Coral a few months later. In March of this year, GVC finalised its acquisition of the enlarged Ladbrokes Coral group, creating a betting powerhouse worth more than £5bn.