William Hill shares rose by as much as 5.2 percent on news of the third such U.S. deal in just over a month, which follows a U.S. Supreme court ruling in May lifting a ban on sports betting and opening the door to states regulating the industry.
A crackdown in its British home market on gambling machines and stakes has driven a 19 percent fall in William Hill shares this year and encouraged it to look to the U.S. for growth.
Other betting firms have made similar moves, with GVC Holdings (GVC.L) last month announcing a venture with hotel and casino operator MGM (MGM.N), while a Dublin-based unit of Paddy Power (PPB.I) struck a deal with Boyd Gaming (BYD.N) in July.
Industry researchers GamblingCompliance estimate U.S. online sports betting will be worth $3.1 billion (£2.41 billion) in revenue by 2023 as more states follow Nevada in regulating the sector.
“We are positioned to capture the evolving U.S. opportunity - starting with land-based sports betting and extending to digital sports betting and, in some states, online gaming,” William Hill Chief Executive Philip Bowcock said in a statement, confirming an earlier Sky News report on the deal.
William Hill US, in which Eldorado will take a 20 percent stake, is already the largest sports betting business in the United States, operating 108 race and sports books in Nevada as well as the state’s leading mobile sports betting app.
Under the terms of the deal William Hill will pay $50 million in stock to Eldorado, subject to a 3-5 year lock-up, as well as a share of profits from its licences.
“William Hill’s share price has fallen too far and today’s deal serves as a reminder that the Group has an interesting option in the US as well as more challenged businesses in the UK,” analysts at Peel Hunt said.
Bowcock said that the deal, which covers 26 casinos in 13 states, should have a positive impact on company results.
“There’ll be an incremental revenue coming through this because of the additional casinos we’ll be able to operate in,” he said, adding the company was open to further partnerships.
Reporting by Justin George Varghese in Bengaluru; Editing by Alexander Smith