William Hill’s plans to acquire CG Technology’s sportsbook assets could be the beginning of major consolidation in the sports betting world.
Tony Cabot, a UNLV professor and a former gaming attorney, said the sports wagering industry is one that benefits a lot from mergers. Because each operator has fixed costs to run a sportsbook, adding more properties or customers has little effect on operating costs.
“It makes sense for the sports betting industry to consolidate,” Cabot told the Las Vegas Review Journal. “The more customers you have, the more you can spread your costs and increase profitability.”
Eilers & Krejcik Gaming analyst Chris Grove said he expects to see “a lot of consolidation” at most levels of the sports betting industry, including suppliers and operators. That poses an additional challenge to new operators, who already face licensing and regulatory hurdles, along with high costs to market entry. The operators that have already gone through a series of acquisitions and are able to compete in a national market—operators like William Hill—have a huge advantage.
Earlier this year, William Hill reported that it was the largest operator of land-based sportsbooks in Nevada, running 109 of the 191 casino in the state and taking in 32 percent of the market share’s revenue.
“William Hill has been a very well-established, very aggressive company, and I think that this is just indicative of their strategy to acquire as much market share in as many markets as possible,” Cabot said. “Ultimately, when the competition shakes out, they will be one of the surviving companies.”
But continued consolidation could be bad news for casinos, which face a dwindling pool of options when choosing a third-party sportsbook operator.
“That could result in higher prices,” Cabot said.
Grove said he doesn’t expect this consolidation trend to hit bettors, though. At least, not anytime soon.
“You still have a lot of distinct operators and a lot of distinct platforms,” he said. “At a point, if it over-consolidates, consumer choice is impacted. Then, illegal sports betting positions could look a lot more attractive.”
