William Hill gambles on expansion into the US
William Hill, Britain's biggest bookmaker, has put down a $39m (£24m) wager on the US market, buying two Nevada sports-betting firms in what it promises is just the start of its international adventure.
The company's chief executive, Ralph Topping, said it is hunting for further deals in other US states, as it hopes to take advantage of a wave of gambling liberalisation in a country that has more often shown its Puritan roots in the past. An expansion into Latin America could also be on the horizon, he said.
The first step in the plan to turn William Hill into an international operation is the acquisition of the Nevada sports-betting companies American Wagering Inc (AWI) and Cal Neva Sportsbook Division of Sierra Development Company, a casino operator. Between them these firms account for 10 per cent of all sports bets in the state. Nevada is the largest sports-betting market in the US, where the industry has annual revenues of $2.7bn and a gross win of $151m.
Mr Topping said the acquisitions were not made from a list of targets drawn up by investment bankers but were the result of personal relationships built up in the state over the past year by William Hill executives. AWI is headed by Vic Salerno, who gave up a lucrative dental practice to move into gambling in 1978, and Steven Nightingale, owner of Cal Neva, who is a published poet as well as a gambling industry veteran. "It's the first time I ever sat down and talked business with a poet – sorry, sonneteer – and an ex-dentist," Mr Topping said.
William Hill's move comes as some states in the US show signs of taking a more liberal line on gambling. Introducing or expanding regulated betting could provide new tax revenues for cash-strapped state and local governments. Two years ago, Delaware legalised sports betting to help tackle what was then an $800m budget deficit. Earlier this month, the District of Columbia became the first US authority to allow online gambling within its borders, expanding its state-run lottery business into poker and other online gaming activities.
Liberalisation movements at the state level stand in stark contrast to the fate of offshore online gambling over the past decade. Several UK-listed internet companies, which had built businesses focused on taking wagers from Americans over the web, were forced to shut down their US operations and pay fines after a federal government crackdown in 2006.
Mr Topping signalled the scale of the company's ambitions overseas by promising that "in the fullness of time, you will see a lot more happening, not only in the US but in the rest of the Americas". But he said that the company would move slowly and would make no assumptions that the US market will mirror the UK. It could take 18 months for William Hill managers to get the licences needed to take charge of its two Nevada acquisitions. Growth opportunities include acquisitions and expanding land-based sports betting. Online betting, while "inevitable", will "come in only slowly", he said.
AWI employs 200 people, operating 72 sportsbooks and kiosks under the Leroy's brand. William Hill is paying $9.4m for the company, in addition to settling $4m of AWI debt and injecting a further $4.3m in the form of a loan. As well as the Leroy's business, it also runs sportsbooks on behalf of several of the biggest casinos on the Las Vegas Strip. William Hill is paying $21m in cash for the 12-year-old Cal Neva, which employs 120 people.
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