William Hill Plc Get A Leg-Up with ESPN Deal

Summary

• William Hill’s US partner Caesars Entertainment has signed an agreement with ESPN
• The company is looking forward to capitalising on the sports betting boom in the United States.
• WMH’s competitors, Flutter Entertainment and GVC Holdings have been positioning themselves in recent years to make the most out of the growing sports betting market in the US

William Hill Plc has been buzzing on the stock exchange for last couple of days, the company’s stock witnessed a jump of nearly 8 per cent on 15 September 2020 after the British gambling company become a part of the multiyear deal with sports programming network, ESPN, as it looks set to capitalise on the sports betting boom in the United States.

The sports media giant, ESPN announced an exclusive agreement with Caesars Entertainment, its US partner. William Hill is also set to benefit by becoming ESPN’s official odds provider across all of its platforms.

William Hill’s competitors, Flutter Entertainment and GVC Holdings have been positioning themselves in recent years to make the most out of the growing sports betting market in the United States.

Sports betting has been legal in the UK since the last seven decades and has been a preferred mode of entertainment for Britons. William Hill, along with ESPN and Caesars have joined forces now; the trio’s expertise and experience make an attractive proposition for the casino operators and sports companies in the United States.

William Hill’s growing reach in legalised sports betting

Since a supreme court ruling in May 2018, which opened the door to legalised sports betting, William Hill has expanded its scale of operations in the United States to become one of the market leaders. The company initially joined forces with Eldorado Resorts, which then merged with Caesar’s, leaving William Hill as Caesars’ sports betting operator. The British gambling company also has a partnership agreement with CBS sports.

On 14 September 2020, the Company stated that Caesars Entertainment had signed an agreement with ESPN. In a month, since the partnership with Caesars Entertainment was forged, William Hill has opened 12 branded sportsbooks at Caesars' properties in Nevada, Iowa, and New Jersey.

Under the ESPN deal, Caesars’ sportsbook by William Hill will be the sole odds provider and co-exclusive sportsbook provider for the media giant ESPN. The trio would be targeting states where sports betting is legal. As per the deal, William Hill would feature on ESPN’s platforms; a huge boost for the company’s exposure in the United States.

The deal will further boost William Hill’s brand recognition and retail footprint in the United States.

William Hill witness growth in Online Net revenue

The Company had shown decent trading before COVID-19, good recovery post-lockdown, and effective cost control during the lockdown. Led by a temporary closure of retail activities and COVID-19 disruption to sporting events, the net revenue was down by 32 per cent year-on-year. However, the online net revenue for the first half of 2020 improved by 1 per cent year-on-year, due to growth in International net revenue, successful product launches, and a progressive resumption of sports events post-lockdown.

(Source: Company’s filings, LSE)

In the first half of 2020, the company’s adjusted operating profit was £11.8 million ahead of expectations due to new Online content and cost optimisation processes introduced by the company.

The company managed to raise £218.6 million from the equity placing and has arranged £205 million of the RCF (revolving credit facilities during the first half of 2020.

William Hill made a good start to the second half of 2020 after underlying profits decreased by 85 per cent year-on-year in the first half of 2020 due to impact of the COVID-19 lockdown on live sport. The company could not provide financial guidance for the fiscal year 2020, primarily due to the uncertainties prevailing in the UK’s economy.

Online sports betting has been a great source of entertainment for Britons. The surge in coronavirus infections, cancellation and postponement of global sporting events are materially impacting the betting business. Let us put our lens through the financial performance of William Hill’s few competitors.

Flutter Entertainment Plc

Flutter Entertainment Plc (LON: FLTR) is into sports betting business. During the first half of 2020, the reported revenue of the company increased by 49 per cent year-on-year to £1,522 million (H1 2019: £1,020 million), following the successful merger with TSG (The Stars Group).

(Source: Company’s filings, LSE)

However, the reported profit before taxation decreased by 70 per cent year-on-year to £24 million (H1 2019: £81 million) after charging £194 million of separately disclosed items (SDIs). The huge increase in SDIs was driven by a cost associated with the merger and an increase in the amortisation of acquired intangibles.

Also read: Five Online Gaming and Betting Stocks That Are Worth Paying Attention To

GVC Holdings Plc

The Sports-betting and Gaming company, GVC Holdings (LON: GVC) has delivered a strong performance in Online business, with the re-opening of the retail operations and the return of the sporting calendar. Online NGR (net gaming revenue) increased by 19 per cent year-on-year (21 per cent ahead on a constant currency basis), with continued double-digit NGR growth in all major territories. The Group is fundamentally sound and has been looking forward to international expansion through organic and non-organic growth.

However, in the first half of 2020 the results remained impacted due to the pandemic, the total Group NGR decreased by 11 per cent (down 10 per cent on a constant currency basis) year-on-year to £1,616.7 million, driven by a decrease in UK Retail (down 50 per cent on a like-for-like basis), European Retail (down 48 per cent) and all other segments. The decrease in NGR was mainly driven by the closure of European outlets that were in accordance with the government directives.

(Source: Company’s filings, LSE)

1 year-Comparative chart: WMH, FLTR, and GVC

(Source: EODHD/Others, Thomson Reuters)