Casino operator Caesars Entertainment (NASDAQ:CZR) has notched a win at the acquisition poker table. The company announced Wednesday that its bid for U.K.-based betting company William Hill has been accepted, and that it will be the new owner of that business. The purchase price is roughly 2.9 billion British pounds ($3.7 billion).
The deal comes amid the sharply rising popularity of online sports betting services like DraftKings. These businesses are benefiting from a combination of increased legalization of their activities and the coronavirus pandemic, which has caused more people to stay home, eager to participate in more entertainment options.
Caesars and William Hill are no strangers to each other. They currently own a joint venture under which William Hill operates sports betting services in American casinos; all of Casears' properties are covered by this arrangement. William Hill holds 80% of the joint venture, and Caesars the remainder.
In Caesars' announcement of the acquisition, the casino operator wrote that it "believes that the current joint venture structure between Caesars and William Hill in the U.S. needs to be broadened in scope in order to fully maximize the opportunity in the sports betting and gaming sector and provide the best possible customer experience."
The company cited "some analysts" estimating that the total addressable market for sports betting and online gambling could be as much as $30 billion to $35 billion. Caesars believes it could generate $600 million to $700 million in net revenue in 2021 from these activities.
The William Hill deal is subject to approval by the British company's shareholders. It is also subject to review by the relevant regulatory authorities. Caesars said the acquisition should close in the second half of next year.