Although it came as a shock to some to see one of the oldest British betting institutions sold off to the Las Vegas based Caesars brand last year, in reality it is nothing new. US companies have been buying out British brands across all industries and sectors over the past few years and gambling is no exception.
With online gambling now legal in many US states, with more passing new bills each year to legalise it, the big US gambling companies have been quick to set up partnerships with UK and European based businesses who have a wealth of knowledge and experience. Indeed, William Hill had been working in partnership with Caesars well before any takeover was announced, running their sportsbook assets in the US.
Caesars were never particularly interested in the ‘old’ William Hill, including it’s network of over 1400 shops. Not being interested in the shops makes some sense, given William Hill have closed 100’s of them in the past few years alone due to declining trade, but they also had no interest in the far more profitable Hill’s web assets in the UK and Europe. In reality Ceasars were simply interested in getting their hands on the proprietary software, platforms and know-how from WH that would allow them to set up a competitive product in the growing and lucrative US market. Indeed, Caesars made no bones about that when they bid for the British brand in the first place.
Rarely does an asset like William Hill come up for sale and so many were attracted to acquiring the non-US parts of the company, including; Betfred, Rank (Mecca & Grosvenor) and Entain (Coral & Ladbrokes), but ultimately it was the 888 group that won the race with a massive £2.2 billion bid. The 888 share price even fell on the news as investors fear they may have paid too much for Caesars cast-off.
888 have certainly bought Hill’s for their European websites, proprietary software and customer base but they have also said they are committed to the shops. The shops though are a headache at the best of times and their vulnerability was highlighted in the various lockdowns caused by the pandemic. How long 888 will hold onto the shops and how many they will keep active remains to be seen. Whether they will change the branding from William Hill with royal blue to 888 with vibrant orange also remains to be seen, although given the historic brand recognition of Will Hill it would seem silly to change it.
New Age Betting Company Takes Over Old Age Bookie
When 888 was first set up in 1997, under the name Virtual Holdings Limited by two Israeli business men, the William Hill brand was already over 70 years old. They take the name from Mr William Hill who initially ran an illegal betting operation from the early 1900’s before setting up a legitimate business in 1934, exploiting a legal loophole that allowed off-track bets to be placed by credit through the post. Despite being against betting shops initially William Hill opened his first shop in 1966 and the brand went on ultimately to own more shops than any other bookmaker. Mr Hill died in 1970.
Since then WH has actually been passed through several hands, including; Sears Holdings in 1971, Grand Metropolitan in 1988, Brent Walker in 1989, Japanese equity bank Nomura in 1997, CVC and Cinven private equity in 1999. When the company floated in 2002 it began a huge era of expansion for Hill’s who acquired 100’s of new shops and attacked the new online betting world harder than many of their competitors. The company partnered with the largest casino software company in the world at the time, Playtech, and despite large amounts of debt William Hill was able to able to start buying back its own business assets from 2013. Eventually this lead them to acquire Mr Green online casino in 2019.
The debt that William Hill carried with them never went away though and despite closing down shops that were losing revenue at a rate of knots the company were hit particularly bad by the corona virus pandemic in 2020. They raised £224 million from shareholders but this also put them on the radar as a company that were struggling to manage their debt. The fact this came at the same time that the US was legalising online gambling meant that the big US firms started to circle like vultures, feeling they could pick up a company with huge online resources for a relatively low price. This is exactly what Caesars did when they bought Hill’s for around £2.9 billion in late 2020. The fact they have now made £2.2 billion of that back in the space of a year and get to keep all of the proprietary rights in the US will be seen as very good business by the US gambling company.
888, however, have always been an online company and if anything suffered from the opposite problem. They were cash rich with good profit margins but ultimately their products were poor compared to the competition and they relied on many third party agents to provide their sites. For example, only recently did 888 move away from Kambi (owned by Unibet) who provided their sportsbook and odds to an in house self-built system. Buying William Hill is therefore one of the best things the company could have done to fill those gaps, even if some people feel they may have paid too much for it.
It is in some ways ironic that one of the biggest and most famous betting institutions in the world has been taken over by what is still really a up-start. It goes to show how powerful online gambling is and how much it has come to dominate that a company like 888 could buy out a company that are over 5x their age. Hill’s themselves though ultimately put themselves in this position by not managing debt appropriately and being over reliant on retail revenue. There is no room for sentiment in business.
What Is The Future For The Shops and Websites
If you are a William Hill online or retail customer you will notice virtually nothing in the coming months, possibly years. 888 will continue to run both the sites and shops under existing branding for the time being at least. William Hill has tens of millions of customers and 888 will want to preserve and grow that the best they can. Ultimately 888 are buying the stuff behind the scenes at WH rather than the branding itself.
Many fear that the shops will suffer eventually. Even though there are less than half the shops today than there once were Hill’s still employs over 8000 people in the UK, many of whom work in the shops and contribute to the local economy. The Will Hill sites are run out of Gibraltar and while this is a crown dependency of the UK its the contribution to the economy as a whole is minimal. Employees have no income tax to pay, corporation tax is as low as it can be and the jobs do not serve the wider economy, as is the case with retail. 888 are also based in Gibraltar for their European online operations in any case, so it will simply be a matter of merging head offices.
There are different ways this acquisition could go and we can look at past examples to emphasise this.
When Paddy Power and Betfair merged (and then later merged with the Stars Group) the brand identities were maintained. Paddy Power and Betfair are very different animals and sensibly Flutter (the name of the company that own PP and Betfair) have maintained that to great success.
However, when Coral and Ladbrokes merged and were then later bought out by GVC private equity (now Entain) both bookies ended up becoming very similar. Their odds are identical, their platforms and products are very similar and they are in effect one and the same. This has resulted in a stagnation for those brands, neither seeming to know what it should be and having lost a lot of the personality they had when Coral and Ladbrokes were separate entities.
888 and William Hill are more like PP and Betfair in that they are different beasts that dominate different markets in different ways, you would hope that they will maintain the brand identities. 888 are synonymous with online casino gaming while William Hill are more associated with sports betting and shops.
Ceasars CEO, Tom Reeg, said they:
“have found an owner for the William Hill business outside the US which shares the same objectives, approaches and longer-term ambitions of that business”
Ultimately, though, Caesars do not really care much about William Hill’s history in the UK and Europe, they just wanted to get as much cash as they could for the assets. It is 888 who will now have to decide how they handle the historic institution. After all, ask anyone in the UK to name a bookmaker whether they gamble or not and William Hill will often be first on the list.
888 May Leave The UK Market?
What has happened in the past when companies have merged is they try to reduce their in house competition. For example, when Leo Vegas took over Royal Panda a few years back they immediately pulled Royal Panda out of the UK market feeling there was no point having both brands compete in the same space.
888 are not going to pull William Hill out of the UK, that would be silly given the recognition and 1400 retail premises, so it is possible 888 may take the decision to reduce their exposure in the UK and push more towards William Hill (providing they keep the brands separate). William Hill customers cannot simply be moved over to 888, or vice-versa, as they are held under different gambling licenses.
Saying that 888 have a lot of exposure in the UK and have built up a customer base in the millions so for the foreseeable future it is expected both will continue to operate in parallel much as before.
Only Betfred Left
Of all of the traditional high street bookies in the UK only Betfred now remain as an independent. That is thanks largely to the fact it is still actively run by Fred Done, the founder, who is unlikely to want to see the business he has grown sold off to an American company and chopped up.
Fred Done will not be at the reigns forever though and eventually the company will be passed on. Very much like when William Hill was first sold in 1971, a year after the death of its name sake, it is entirely possible that as soon as Betfred changes hands it may be sold off. There are plenty of US companies ready and waiting for such a scenario.
Those who value the fact they bet with a UK company may now want to leave William Hill in preference of Betfred. Saying all of that, though, Betfred are only in the UK for their retail operations, their online business is also run out of Gibraltar.
William Hill’s retail division and revenues will remain in the UK in any case and taxes will go to the UK government – that is for the time that 888 keep the shops. I wouldn’t be surprised to see 888 try to close less profitable shops and sell off the good ones in the coming years and then just keep hold of the online assets. If they do sell the shops expect the primary bidder to be Betfred.
The breakup of William Hill probably now represents the final end to the old era of gambling companies. We have known for years that the future is online and we have seen more recently that future will now be driven by the US. Things change and time moves on but if 888 do decide to close and/or sell the shops it will be hard for some to witness the British built William Hill chopped up even further by successive buyers.