William Hill has secured a tie-up deal with US casino group Eldorado, in a move which has triggered a share price rise over 6 per cent for the bookie.
Tighter regulation of the gambling sector in the UK and a landmark ruling liberalising the industry in the US means British betting firms are ploughing ahead with expansion plans across the pond at pace.
William Hill said the deal will give it access to ‘one of the largest and most attractive’ casino chains, with Eldorado boasting 23million customers across the US.
It’s a deal: Betting giant William Hill has secured a tie-up deal with US casino group Eldorado
William Hill’s share price is up 6.22 per cent or 15.45p in morning trading to 263.95p.
Under the terms of the deal, Eldorado will receive £39million worth of William Hill shares, subject to a lock-in period of up to five years, and a 20 per cent stake in the UK betting firm’s US operations.
Since the US sports betting sector started to be liberalised earlier this year, William Hill claims to have achieved the widest footprint of any sports betting operator in the US.
Philip Bowcock, chief executive of William Hill, said: ‘This partnership provides extensive cross-sell and profit growth opportunities to both parties.
‘Together, we are positioned to capture the evolving US opportunity – starting with land-based sports betting and extending to digital sports betting and, in some states, online gaming.’
Expansion: William Hill said the deal will give it access to ‘one of the largest and most attractive’ casino chains
William Hill US has assets worth £53.4million and made underlying earnings of £22.2million last year.
An analyst at AJ Bell said: ‘UK gambling companies are wasting no time with increasing their position in the US following a landmark development earlier this year to legalise the US sports betting market.
‘William Hill’s new partnership with Eldorado Resorts makes perfect sense as a land-grab exercise. By linking with the casino group, it gets access to 13 states with a view to launching William Hill sportsbooks in a number of these states within weeks. Further down the line, it is in prime position to benefit as further states allow sports betting.
‘William Hill needs the US to be a success because its UK operations continue to face increased regulatory pressures. Its London-listed rival GVC also has similar aspirations over the pond having recently made a partnership with casino group MGM Resorts.’
Ian Forrest, an investment research analyst at The Share Centre, said: ‘William Hill has already had some success in the US but the shares have been hit by the outcome of the UK government’s Triennial review which dramatically reduced the maximum stake allowed on fixed odds betting terminals in Britain.
‘The company believes that will reduce its gaming revenue by 35-45% and operating profit by £70m-100m so the shares are no better than a hold.’
In July, the owner of Ladbrokes and Coral, GVC Holdings, secured a £152million tie-up with the world’s biggest casino operator, MGM Resorts.