July 26, 2016

William Hill is lukewarm on ambitious three-way merger deal

William Hill has fired a shot across the bows of suitors Rank Group and 888 amid scepticism that the pair would be able to pull off an ambitious three-way tie-up with Britain’s biggest bookmaker.

Rank, the operator of Grosvenor casinos and Mecca bingo halls, and online gambling business 888 are eyeing a consortium approach for struggling William Hill, in what would mark the latest deal to shake-up the gambling industry.

The potential bid leaked at the weekend, forcing the high street bookie to confirm today that it had received “a highly preliminary approach” that did not set out price or other terms.

William Hill said it would “listen to and consider any proposal which might be forthcoming”, but it also warned that it was “not clear” that a tie-up with Rank and 888 would “enhance” its “strategic position or deliver superior value”.

Analysts were similarly cautious about the prospects for a deal, given the complexity of a consortium bid. William Hill shares initially leapt as much as 12.8pc but only closed up 4.8pc at 328.8p as investors tempered their excitement about a tie-up as the day wore on.

Simon French, an analyst at stockbroker Cenkos, warned that “it is not immediately apparent” that 888 and Rank have the “skill set” to revive William Hill’s troubled online sportsbook or its estate of about 2,300 betting shops.

Meanwhile, Davy analysts said that “questions relating to funding would need to be answered” because, even combined, 888 and Rank are still much smaller than the high street bookie.

While a deal between William Hill and 888 makes sense and a takeover was attempted by the former last year, the Davy analysts were more sceptical about the “strategic rationale” of combining a betting shop business with a casino and gambling operator like Rank.

Both 888 and Rank have dominant shareholders - the Shaked brothers at the former and Malaysian billionaire Quek Leng Chan at the latter – which analysts said further complicates a deal and could make a merger unattractive to Hill’s investors.

Under Takeover Panel rules, 888 and Rank have until August 21 to make a formal offer or walk away. It is possible that William Hill, left vulnerable after its board ousted under-performing chief executive James Henderson last week, now attracts a rival bidder.

888 shares rose 3.4pc and Rank slipped 0.5pc.

Britain's gambling industry is in the midst of consolidation, with Paddy Power and Betfair completing a merger earlier this year and Ladbrokes and Coral in the midst of securing regulatory approval for a tie-up.

The Competition and Markets Authority is expected to publish its final report into the Ladbrokes-Coral deal tomorrow. In May, it provisionally recommended they sell as many as 400 betting shops to assuage concerns about competition.

July 14, 2016

Betfred the favourite in race for Ladbrokes and Coral shops

The Sunday Times has reported that Betfred is nearing a deal to buy hundreds of betting shops, as the Ladbrokes-Coral merger enters the final stages of its UK Competition and Markets Authority (CMA) review.

As part of its merger completion, Ladbrokes-Coral has been forced to sell a significant number of betting shops in order to secure UK competition approval and close its £2.3 billion merger (first announced – June 2015).

In May the UK markets authority had ordered Ladbrokes and Coral governances to begin to sell off a number of its retail assets as its review had identified +600 areas across the UK where the merger could harm competition.

Manchester-based Betfred, Britain’s fourth largest highstreet bookmaker with a retail portfolio of 1400 shops, is reported to be willing to buy between 300-400 of Ladbrokes-Coral’s inventory.

The Sunday Times reports that led by Founder Fred Done, Betfred’s retail bid had edged out Irish competitor BoyleSports, whose founder John Boyle had viewed the retail sell-off of the Ladbrokes-Coral merger as an easy way of expanding BoyleSports in the highly saturated UK betting market.

The move by Betfred to increase significantly its retail betting portfolio may surprise some industry analysts. Filing its annual return for 2015 this month the bookmaker reported losses of £76 million.

Betfred governance stated that a tough 2015 had seen its operations readjust to new industry taxes with lower revenue margins.

Valve requests Counter-Strike gambling sites to ‘cease operations’

Valve is no longer permitting gambling sites to use its technology.

The company, which owns and operates the Steam distribution portal and popular games like Counter-Strike: Global Offensive, announced today that it is enforcing the rules of its Terms of Service for the application protocol that enabled gambling sites to operate. It will request that all gambling sites, like CSGO Lotto, Skings Gambling, and CS:GO Diamonds, to stop immediately.

Up until now, these sites have used the OpenID API (application protocol interface) to enable item-trading between a pool of players. Everyone could wager their various digital items — some worth upward of $1,000 — and then the winning team would take the spoils.

“Using the OpenID API and making the same web calls as Steam users to run a gambling business is not allowed by our API nor our user agreements,” Valve spokesperson Erik Johnson wrote in an update. “We are going to start sending notices to these sites requesting they cease operations through Steam, and further pursue the matter as necessary. Users should probably consider this information as they manage their in-game item inventory and trade activity.”

GamesBeat has reached out to Valve for further comment, and we’ll update this post with any new information.

These operations recently came under scrutiny following the revelation that popular YouTube personalities Trevor “TmarTn” Martin and Tom “ProSyndicate” Cassell founded and own a stake in the CSGO Lotto site they promoted on their video accounts without disclosing that relationship. Last week, a mother of one player filed a complaint in the Southern District of Flordia against CSGO Lotto, Cassell, Martin, and Valve alleging they collectively created a market that operates like an illegal casino.