A tweet from a renowned British racecourse bookie in the last week of December mistakenly suggested that every major sports-betting and gaming brand in the UK was now under the one roof of Entain.
It was swiftly deleted after his followers pointed out that three of the companies named – Paddy Power, Betfair and Sky Bet – are actually owned by rival Flutter.
Yet, there is a grain of truth in the idea that the previous plurality of the UK betting landscape has been swept away in the past five years, to be replaced by something of a duopoly.
Entain has gathered together erstwhile independent entities Ladbrokes, Coral, Sportingbet, PartyPoker, Gala Bingo and Foxy Bingo. Flutter has the aforementioned trio as well as PokerStars and most recently Tombola.
Add in 888’s recently completed acquisition of the William Hill international business, and it is fair to say that concentration of ownership is now an issue in UK betting and gaming as never before.
Taking an international leap
Importantly, all three have not been shy in building on their international footprints. 888 is the “least” of the trio, in this regard, but still commands a leading position in Spain and with William Hill it now has operations in multiple other regulated jurisdictions.
888 will surely look to emulate the efforts of its rivals. Entain has leading brands in Germany with Bwin and CasinoClub, Italy with Eurobet and Gioco Digitale, in Georgia with Crystalbet as well as a foothold in Australia with the Neds brand.
In May this year it bought the Enlabs business including leading Baltic-facing betting brands and in November it was rumored to be in the race to buy another Baltic-facing operator, Olympic Entertainment.
Flutter, meanwhile, has the Australian market leader with Sportsbet, Adjarabet (again in Georgia) and now with its latest acquisition, Sisal, it finds itself owning a market leader in Italy.
This is on top of their respective positions in the U.S. where the Entain/MGM JV BetMGM regularly tops the market share charts in igaming. The Flutter majority-owned FanDuel has been blazing a trail as the market leader in sports-betting.
Attack is the best form of M&A defense
It is their U.S. positioning that has made them the subject of much M&A chatter.
Neither situation is exactly clean; Entain’s 50% BetMGM stake is likely to prove difficult to disentangle from the mothership.
The rumored potential float of FanDuel in the U.S. would need to be carefully managed. In both cases, the interests of the UK shareholders would need to be paramount. They would need to feel they were getting a good deal in whatever scenarios might emerge.
But the recent corporate actions of Entain and Flutter also tell a story about restless ambition.
Neither is standing still while waiting for developments in the U.S. They have been busy making themselves bigger in the eyes of predators and that much harder (read expensive) to swallow.
At the same time, they convey the message to shareholders that there is much more to be gained from not focusing solely on the U.S.
The field to themselves
And while the European players are clearly casting their net wide for potential targets, they wouldn’t appear to be encountering any competition from their U.S. peers.
We have, of course, recently seen what looks now like a fishing expedition on the part of DraftKings when it went public with a bid for Entain in September.
But whether that approach was predicated primarily around gaining exposure to the target’s global spread of revenues is debatable.
The other much mentioned potential bidder for Entain is MGM but again, the comments from the top management there suggest it is the tech they find attractive – along with the 50% of BetMGM it doesn’t already own – rather than any opportunity to spread its global gaming wings.
The no-conquering Caesars
We have an example of the indifference on the part of U.S. gaming and betting entities to anything going on beyond the shores of North America with Caesars Entertainment.
When it bought William Hill it made it plain immediately that the international elements of the business were of no interest whatsoever. Having hived off and digested the U.S. business, it spat out the rest leaving it to 888 to pick up the pieces.
Such was the disdain for the international business that CEO Tom Reeg in May said that Caesars had “not had a moment’s pause in selling”.
“One of my pet peeves, when I was an investor, was companies that didn’t know what they were good at,” he added. “I can’t tell you we are good at running a non-U.S. online business.”
Stick to what you know
It might be that Reeg is speaking on behalf of the entire U.S. industry here.
But the apparent lack of interest might not last; one of the reasons mentioned for the DraftKings/Entain deal was the profits it could deliver.
Those profits come from global markets that might not be as fast-growing as the U.S. and are accompanied by less euphoria. But while they may display fewer growth characteristics, they do produce the goods when it comes to the bottom line.
As the focus turns inexorably to the same thing in the U.S. in the year ahead, it might be that the money to be made elsewhere around the world might attract more attention.
