Caesars Entertainment Corp. (CZR) - Get Report shares jumped higher Wednesday after the casino operator agreed to buy British bookmaker William Hill for $3.7 billion as firms continue to chase expansion in the U.S. sports betting market.
The deal is likely to see Caesars buying, and then selling, William Hill's non-U.S. assets, which include thousands of U.K.-based betting shops, and integrating its U.S. business into the broader Caesars empire. Caesars said the growing American sports betting and online gaming markets, which it said could be worth as much as $35 billion a year, was the key driver for the trans-Atlantic takeover.
William Hill, a familiar figure in British culture owing to its sports betting dominance in that market, has been operating U.S. sports books since 2012 and has operations in 13 states. It also has an existing 20% partnership with Caesars.
"The opportunity to combine our land based-casinos, sports betting and online gaming in the U.S. is a truly exciting prospect," said Caesars CEO Tom Reeg. "William Hill's sports betting expertise will complement Caesars' current offering, enabling the combined group to serve our customers in the fast-growing U.S. sports betting and online market."
"We look forward to working with William Hill to support future growth in the U.S. by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment," he added.
Caesars Entertainment shares were marked 3.14% higher in pre-market trading Wednesday to indicate an opening bell price of $56.20 each. William Hill shares were little-changed in London at 274.1 pence each, giving them a market value of £2.87 billion, or $3.7 billion.
Sports betting stocks, and the sector in general, have been on a steady rise since the U.S. Supreme Court struck down a decades old law that prohibited New Jersey from allowing sports wagers to be placed at state casinos.
The ruling allowed other states to challenge the 1992 Federal Professional and Amateur Sports Protection Act that effectively allowed only Nevada, Oregon, Delaware and Montana to offer full or limited facilities in the $150 billion sports betting market.