After years of laying low, bet365 has amped up its US activity and stepped away from China’s unregulated gambling market. Subsequently, many have speculated that the shifts indicate the company is gearing up for a potential sale or public offering. According to a Guardian report published Thursday, the possibility of a sale is no longer just speculation.
Reportedly, bet365’s owner, the Coates family, is considering a full or partial sale of their gambling empire, which could be worth as much as $12 billion (£9 billion).
Coates in talks for potential sale or IPO
According to The Guardian’s anonymous sources, bet365, headed by Denise Coates, recently held talks with US banks and advisors about options for a potential sale. The informal discussions also explored a medium-term plan to list the company on the US stock exchange.
Reportedly, one option could include a partial sale to a private equity firm ahead of an eventual listing or sale. Spinning off part of the business, rather than jettisoning the whole thing, is another possibility.
If bet365 opts to sell, Denise Coates’ 58% stake in the company could be worth more than $6.5 billion (£5 billion).
Under her stewardship, bet365 became a pioneer in online betting technology. More recently, the company expanded to the US, operating sports betting in 13 states and online casinos in two.
As noted above, recent steps taken by the Coates family would make bet365 more appealing to US investors.
In addition to pulling out of China’s illegal market, the company transferred its ownership of Stoke City football to Denise’s brother, John. Regulus Partners’ Paul Leyland told The Guardian that a US sale offers Denise an exit and a lucrative opportunity for cash-rich US investors.
There’s more money chasing gambling than there are gambling companies that are investable.
He added that the potential is “compelling for everybody,” particularly after the company’s recent shifts.
It would be very difficult to have China exposure given the level of scrutiny that might be applied in the US, and why would you have a football club attached, that’s a family legacy.
If bet365 is looking for a US buyer, presumably, there’s potential for a greater US presence. But if a sale goes through, what might that mean for US gamblers?
What routes does bet365 have to further US expansion?
Outside of existing state operations, a US-owned bet365 could apply for licensing in any new jurisdictions that legalize online casino or sports betting. However, US states have difficulty passing new online legislation, so when and where that might happen is uncertain.
To play catch-up elsewhere means competing against long-established US operators. Bet365’s sportsbook is known as one of the best in the world, so the company could leverage that. However, it seems challenging for even the most prominent players to make money in US sports betting, a likely reason for the industry’s obsession with online casinos.
Notably, SI Casino is leaving Michigan this year. However, Hard Rock bought the company’s assets and will likely operate under that license. For bet365, the most likely entry into the Michigan market could be through a tribal partnership.
A self-branded tribal operator could decide that operating under bet365’s banner would generate more revenue. If so, we could see a deal that migrates the tribe’s existing players and gives bet365 that slot.
Alternatively, when rumors of the possible bet365 sale started circulating, analysts named DraftKings the “only real buyer” able to acquire a company of bet365’s size.
Still, DraftKings CEO Jason Robins recently said that neither mergers and acquisitions nor international expansion are immediate priorities. However, he also said a “great” opportunity could revise the company’s plans.
Possibilities abound
So, if DraftKings were to snap up bet365, what would that look like?
Realistically, that would depend somewhat on the type of sale, but DraftKings isn’t likely to gain much from bet365’s US customer database. However, given the brand’s cache, it could be worthwhile to operate both and cross-promote (and cross-sell) between them, perhaps with a shared rewards program.
Or perhaps DraftKings would combine the best of both companies into a Frankenstein super-brand. DraftKings365, perhaps?
Whatever’s next for bet365, we’ll have to wait and see.
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