Two of the biggest players in the gambling industry could join forces in a new sports betting venture. The two companies have entered advanced talks for the plan. The crux of the proposed venture is a combined online casino and online sports betting business. Caesars Entertainment is one of the biggest gaming companies in the casino industry. The new company is a product of a recent stock buyout of Caesars by Eldorado Resorts. William Hill owns and operates one of the biggest sportsbooks in the world.
How Will Caesars Entertainment And William Hill Join Forces In A New Sports Betting Venture?
Company analyst David Bain has reported that the two companies have engaged in talks for quite some time. The result could be a 50/50 partnership. The new venture would combine Caesars iGaming and online sports betting with William Hill USA.
This would be a logical move. Caesars already has a 20 percent equity stake in William Hill’s US operation. Bain was quoted as saying:
“Checks cite negotiations for ownership structure/splits are in advanced stages. With a mindset of a likely spin-off before the end of the year. Of course, there are risks to the timeline. Including delays in the final throes of talks and overall market conditions.”
Even if the deal is not finalized until early 2021, it would be beneficial to both parties. Bain suggested that this would still exceed investor expectations. He also added it would be a “transformational catalyst” in the industry.
Caesars Stock Has A Buy Rating?
Bain goes as far as to give Caesars stock a “buy” rating. He set the target price at $75 based on the name alone. This implies an upside of 33 percent from the current market value. The idea of separating Caesar’s online casino and sports betting interests is not new. It was discussed over a year ago during the Eldorado negotiations. Soon after the proposed merger was announced, those business units were in play.
At the time, Eldorado Resorts CEO Tom Reeg talked about a possible spin-off. He did not think the markets would fully appreciate the value in those businesses. By spinning them off, it would unlock shareholder value.
A MUST READ: William Hill Sportsbook Expands its Presence in Nevada.
Reeg is still in charge of the “new Caesars.” Going back to his first earnings conference in August, he suggested a decision would come by the end of 2020.
The idea of the partnership with William Hill has steadily gained traction in the past few months. The UK company is currently running all of Caesars’ domestic sportsbooks. It is already the third-largest player in the US online sports betting market. Yet, perception issues with the investment community still exist. William Hill USA is not adequately valued in their eyes.
The overall growth forecast for the emerging US online sports betting industry is extremely positive. William Hill USA is in an excellent position to capitalize on this with 65 million Caesars Rewards members. Many of them can be converted into online sports betting customers. The upside for both companies is high if this joint venture takes place.