LAS VEGAS – GAMING – There’s no question about it, online gaming has been one of the big success stories of recent years. It’s introduced a whole new audience to the thrill of the casino experience and created a real boom for the companies involved.
But, as with all successful sectors, it has also stated to generate its own particular set of pressures. For example competition is fierce with more and more entrants to the market hoping to get their own slice of the action.
A number of the online operators also have a high street presence in the form of bookmakers for whom fixed odds betting machines are a major source of revenue. However a clampdown on these machines may well be in the pipeline which would hit profits hard. Higher taxes across all their business areas are also having an effect as the government sees its own chance to raise extra revenue from an industry that’s booming.
As a result many of the big operators have been looking to merge with or acquire competitors on the principle that economies of scale and broader customer bases will help to insulate them from potential risks. The fact that a number of the companies are based in Gibraltar also means that the uncertainties of a post-Brexit world are also in the mix.
Earlier in 2016 one of the biggest gaming news stories was about the proposed acquisition of betting giant William Hill by 888 Holdings PLC which is listed on the London Stock Exchange, the company carries both B2B and B2C business units including well-known brands such as 888casino which is a leading online casino with strong presence in the UK as well as 777.com, 888Poker, 888sport, 888ladies and some other less known brands.
By trying to take over William Hill, 888 were hoping to turn the tables on a company that had tried to acquire them only a year earlier. But even though they had the support of The Rank Group and were able to make two bids of more than £3 billion Hill turned down the offer on the basis that this was not an accurate reflection of the company’s true value.
A year before 888 had also been on the verge of taking over the gaming company Bwin but was beaten at the last moment by a surprise bid from GVC whose £1.1 billion deal was enough to sway the Bwin board in their favour. However these two failures to complete successful acquisitions are said not to have deterred 888 from being open to more attempts in the future.
William Hill have also been in the news recently for a failed merger of their own. The company had been hoping to join forces with the Canadian company Amaya. Again, negotiations had reached an advanced stage when the Canadians decided that their shareholders would benefit more if they remained independent.
Another company on the acquisition trail is Ladbrokes Coral, itself the result of a recent merger, who are reported to be bidding to buy Australia’s largest bookmaker, Tabcourt, in order to take advantage of the de-regulation in gaming licences that came into force in the country in 2012.
So these are undoubtedly exciting, if turbulent times, in all areas of the gaming market. As to what shape it will take in the future, fewer, larger players look likely to emerge. Then we’ll all start to discover whether bigger really does mean better.