Analysts ponder Caesars-William Hill sports betting expansion Howard Stutz, CDC Gaming Reports · September 23, 2020 at 7:31 am Two gaming analysts suggested Tuesday that Caesars Entertainment’s partnership with sports betting giant William Hill could be revised as the casino giant looks at further ways to monetize its sports and iGaming businesses. Deutsche Bank gaming analyst Carlo Santarelli said in a research note that addressing the current structure with William Hill should be a priority. “We believe there are numerous options on the table pertaining to this structure and reconciling it with an opportunity that is beneficial for both parties,” Santarelli said. Meanwhile, Roth Capital Partners gaming analyst David Bain offered a similar view. “A Caesars and William Hill interactive partnership spinoff in the public equity markets is likely to happen this year, well ahead of investor expectations,” Bain wrote. In the two months since the $17.3 billion merger between Eldorado Resorts and the former Caesars Entertainment became official – with the management of Reno-based Eldorado taking control of the operation while retaining the Caesars name and stock symbol – one of the prime growth opportunities that has attracted the investment community is sports betting. In 2019, the former Eldorado gained a 20% ownership stake in William Hill US, the subsidiary of the United Kingdom-based sports betting giant, in exchange for a 25-year deal that will see William Hill operate sports betting in the company’s casinos in Nevada and in regional markets. The Eldorado-Caesars merger was completed on July 20 and created the largest casino company in the U.S., with 55 gaming properties in 16 states. Since that time, William Hill has opened 12 branded sportsbooks at Caesars’ properties in Nevada, Iowa, and New Jersey. Pending regulatory approval, the remaining sportsbooks across the Caesars portfolio will be rebranded. The mobile sports betting app, Caesars Sports Book by William Hill, will soon be available in Indiana, Pennsylvania, New Jersey, and Nevada, pending regulatory approvals. Bain told investors that Caesars and William Hill have been negotiating toward a 50-50 ownership split of an entity that includes William Hill US. “The intent is to then create an independent company through the sale or distribution of new shares of the business in the public equity markets, in our view,” Bain said. Santarelli noted that Caesars’ management – headed by for former Eldorado CEO Thomas Reeg, who is now Caesars CEO – said “anything and everything is on the table” as it pertains to unlocking the value of the sports betting and iCasino. “‘Management expects to have the strategic elements of the vertical in place by year-end,” Santarelli said. “Clearly, when looking at the landscape within the sector, there is considerable opportunity, especially when evaluating public comps.” Bain said the timeline for a spin-off could be before the end of the year, adding the ownership structure and splits “are in advanced stages.” Even if the talks stall and market conditions push a deal in the first quarter of 2021, “it would still be well-ahead of investor expectations and draws a transformational catalyst into sight.” Caesars Sportsbook by William Hill Last week, Caesars unveiled its sports betting media partnership with ESPN, which will link the network’s digital platforms with the company’s sports betting operations. Caesars Sportsbook by William Hill will become the exclusive odds provider and co-exclusive sportsbook link-out provider to ESPN. Financial terms were not disclosed. “We think this is a rational customer acquisition strategy, via a long-term contract with an established partner, in a cost-effective manner,” Santarelli said. “Importantly, we believe incentives are properly aligned between the parties.” William Hill US is on pace to operate in more than 170 retail locations across 13 states. In July, as part of the Caesars-Eldorado merger, William Hill assumed the operations of two sportsbooks in Lake Tahoe and nine on or near the Strip, including the iconic sportsbook at Caesars Palace. More than Caesars Many of William Hill’s sportsbooks are not associated with Caesars. Through the company’s purchase of CG Technologies in August, William Hill acquired the contracts to manage sports betting operations at the Venetian Las Vegas, the Palazzo, Tropicana Las Vegas, Cosmopolitan of Las Vegas, Palms, and Silverton. All are located on or near the Strip. William Hill also manages the sports betting operations for five downtown Las Vegas resorts: The Strat, the Downtown Grand, Binion’s, the Plaza, and Four Queens. The company operates retail sportsbooks in New Jersey, Indiana, West Virginia, Illinois, Colorado, and Iowa, and is online in Iowa. It is also a licensed sports betting provider in numerous casinos in Mississippi and New Mexico and serves as the exclusive risk manager for the Delaware and Rhode Island sports lotteries. On August 3, William Hill opened a sportsbook at the Capitol One Arena in Washington D.C. that features wagering kiosks. Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. 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