William Hill aims to acquire Penn National.
In an attempt to expand its operations in the United States, British bookmaker William Hill is planning to acquire Penn National Gaming (PNG), a US casino operator listed on the Nasdaq. The decision to acquire PNG is largely due to the upcoming reduction of Fixed-Odds-Betting-Terminals (FOBT) in the UK. Additionally, GVC, owner of Ladbrokes, has recently announced a deal with MGM.
Based in London, traditional bookmaker William Hill has outlined its expansion plans in the newly legalized US sports betting market. The company aims to acquire the Hollywood Casino and Tropicana owner PNG, based in Wyomissing, Pennsylvania. PNG operates multiple casinos in various states, including New Jersey, Kansas, Massachusetts, Texas, Florida, and Nevada, and provides a sports betting program for horse racing. In 2017, the company generated more than $3.1 billion in revenue (approximately €2.7 billion). The current share price of PNG is around $31.45 (~ €27.21).
However, negotiations are still in their early stages, according to Hill's CEO, Philip Bowcock. Additionally, talks are being held with 14 other operators, with partnerships already signed with 11 casinos in Mississippi and one in West Virginia. The companies involved in these talks have not yet been disclosed, as the trade press has been rejected any inquiries concerning the matter.
Before the repeal of the sports betting ban by the US Supreme Court (USSC) in May, sports betting was only legal in four US states.
William Hill, a London Stock Exchange bookmaker, has been active in international gambling since 2012. The company offers sports betting programs in Nevada, Delaware, and New Jersey, as well as a racebook in Iowa. Bowcock sees this history of global expansion as an advantage for the company but emphasizes the importance of working with major US casinos to fully exploit the potential market. He expressed his thoughts by saying, "We are currently experiencing an extremely exciting but challenging time in the US. Having an established US business was advantageous for us after the repeal of PASPA, but so far, we have only scratched the surface."
If the acquisition of PNG by William Hill were to be completed, it would mark a major expansion route for a third significant UK bookmaker in the short term. Previously, the buyout of FanDuel by Paddy Power Betfair (PPB) took place in May, while a $200 million (approximately €173 million) joint venture deal between MGM Resorts and GVC Holdings was also concluded last week. Ladbrokes and PPB are often considered William Hill's main rivals in the UK market.
Concerns over poor H1 results for William Hill have been attributed to the impending reduction of FOBT maximum stakes from £100 to £2, which the British government confirmed in May. Hill is said to have incurred a mandatory accounting fee of £915 million (approximately €1 billion) because of this change. The net loss was reported to be over £820 million (approximately €732 million), according to the British Guardian. Meanwhile, Hill reported a gross profit of only £96 million (approximately €107 million) for the first half of the year, representing a decline of 13% compared to H1 2017.
The government led by Theresa May recently extended the controversial FOBT limit until 2020. However, William Hill is urging the British government to rethink this decision, claiming it could lead to the closure of up to 900 betting shops and threaten more than 4,500 jobs. The poor H1 results should not come as a surprise, given that Philip Bowcock had anticipated the potential consequences of the reduction in the FOBT limit.
In the ongoing FOBT debate, William Hill is not alone in putting pressure on the government. Last week, bookmaker Betfred secured a £100 million (approximately €113 million) tax refund through a court order over a calculation error between 2005 and 2013. It remains to be seen if this represents a precedent.
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