It didn’t take long for US casino behemoth Caesars Entertainment to finally start reaping the rewards of their $3.7 billion acquisition of another sports betting giant, William Hill. On Tuesday, during an earnings call, CEO Tom Reeg announced the latest step in Caesars’ attempt to climb the legal sports betting provider ladder with a rebrand of William Hill’s retail sportsbooks to Caesars and the William Hill mobile app to Caesars Sports.
“We’re going to rebrand our books at Caesars, rebrand our apps as Caesars Sports, and tie our business into our Caesars Rewards database,” Caesars Entertainment Reeg said during the earnings conference call. “As I look to what’s out there in sports, and do the analysis of the numbers, there are some things that make us optimistic. There’s a great correlation between spend and market share at this point.”
“(The transaction) took a little longer than we had expected in the court hearing,” Reeg said on the call, “but we got to the outcome that we wanted and now we control our own destiny and what I continue to believe is an extraordinarily exciting opportunity for the company.”
A Bit of Background
Caesars’ takeover of William Hill creates one of the biggest betting brands in the most up-and-coming global legal sports betting markets – the US. William Hill had been America’s third-largest sportsbook before Caesars took over its global operations.
Caesars had an existing relationship with William Hill prior to the takeover. Caesars had owned 20% of William Hill’s USA and the British sportsbook was operating its mobile platforms out of a number of Caesars’ brick-and-mortar facilities.
Caesars, with the deal picked up William Hill’s operations in in Nevada, New Jersey, Pennsylvania, Indiana, West Virginia and Iowa, among others.
The new market access will help Caesars build on a landmark, potentially game-changing relationship they forged with ESPN last September. That deal will act to link integrations from ESPN’s digital platforms to sportsbooks from Caesars Entertainment.
What It Means for the US Market
Caesars is poised to build on their status as an elite US legal sports betting provider with the merging of its own US presence and that of William Hill.
“We were very early telling people we expect to see continued convergence on the media side. We’re really the only significant player at this point,” Reeg said. “Now that we’ve bought William Hill, that controls everything. We’re a one-stop shop. If you’re looking to get into this business, we’re certainly a logical call and you should expect we’ll continue to have those discussions, and if there’s something that creates more value for us down that road, you should expect us to head there.”
More Investment on Tap
More investment in the US market thanks to Caesars’ cash flow-positive position is likely on tap for the US company. A free cash flow infusion of up to $100 million every month has been mentioned by its CEO as the company attempt to reach a higher share of the US market.
“We understand that we’re going to need to invest in this business, both on the tech and the customer acquisition side. And you should expect a significant shift from us as we close the transaction and move forward,” said Reeg
“You shouldn’t expect us to be just throwing money away to buy market share. You should expect us to build this thoughtfully, but you should expect to see a significant increase in investment in this side now that we’ve got all our ducks in a row.”
Off-Loading Non-US Assets
Caesars signaled almost immediately upon news of the impending William Hill takeover that they are not interested in William Hill’s overseas entities. There has already been interested in those overseas brands from a few European legal sports betting Heavyweights.
Apollo Global Management and Gibraltar-based gaming group 888 Holdings are two companies rumored to be in the hunt for William Hill’s European assts. Hopes for Caesars are for a deal to come to fruition in the next couple of months in the $2 billion range.
A sale of William Hill’s overseas products will provide significant capitol and an ability to pay down debt for Caesars as it strives for a more dominant role in the US scene.
The Ramifications
Ceasars stock rose 7% to $102 per share on Wednesday with the release of its Q1 profits and the company shedding some light on the path it hopes to take with regard to expansion.
The end result is some intense and stout competition for BetMGM, widely regarded as the market leader in the space. Partnerships with all four major North American sports betting leagues and the two DFS giants within the US legal sports betting scene should bolster that attempt.
Caesars is officially All-In on the US legal sports betting industry. Expect to see the company’s branding everywhere within the US sports scene as Caesars’ rise to the top nears completion.
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