In one of the biggest stories to emerge from the online gambling industry in 2017, British bookmaker, William Hill, has announced its plan to take legal action against the sale of prominent gaming company, NYX, to fellow gambling giant, Scientific Games Corporation.
In what's turning out to be an intriguing situation, industry experts suggest that William Hill fears the deal would position Scientific Games and their new subsidiaries to take advantage of imminent changes in the legal status of sports betting across the United States!
William Hill's recent press release announced the firm's decision to take legal action against the acquisition of NYX Gaming by Scientific Games. The intrigue in the deal is due to the UK and Irish bookmaker being a minority shareholder in NYX gaming.
As such, William Hill has specifically asked authorities to sanction its convertible preference shares into ordinary shares of NYX by December 4 2017. Assuming the request is sanctioned, the online bookmaker would hold 32% of voting stock in NYX Gaming, giving it significant power over the sanctioning of the deal with Scientific Games.
However, the case is far from straightforward, with experts suggesting that impending changes to US sports gambling law are at the heart of the battle between William Hill and NYX. Indeed, favourable changes in US sports betting laws is a distinct possibility.
The Supreme Court's has an impending review of online gambling on December 4, which could see the abolishment of the Professional and Amateur Sports Participation Act (PASPA).
William Hill logically fears that OpenBet, a subsidiary company of NYX, would be perfectly positioned to take advantage of looser online sports betting laws in the US, and as such have seemingly moved to protect their interests.
In response to William Hill's request for the conversion of shares, NYX has predictably responded by rejecting the move, stating that:
"Based on certain regulatory and licensing restrictions, NYX’s Board cannot convert the preference shares at this time. NYX is considering all options available to it, including whether William Hill’s conduct could have any impact on NYX’s gaming licences and is bringing appropriate legal action or actions against William Hill to protect NYX shareholders."
It's therefore clear that both sides are aware of the huge impact that the deal could have in terms of revenue from online sports betting across the USA. The company's position was re-affirmed with a statement aimed at reassuring shareholders of their stance against William Hill:
"The NYX Board also reaffirms its unanimous determination that the terms of the Acquisition are fair and reasonable and are in the best interests of NYX and its shareholders and its unanimous recommendation that NYX shareholders vote in favour of the Acquisition."
The magnitude of the situation from William Hill's perspective, is similarly as explicit, given the firm will lose over $50 million by converting its shares to give it the scope to vote against the merger and block OpenBet's potential expansion into online sports betting in America.
Furthermore, should William Hill obtain the power to block the deal, shareholders in the bookmaker will also miss out on a premium which would be payable following the sale – illustrating the potentially negative impact such a deal may have on their own revenue and market position.
Making a statement in response to NYX's stance, William Hill commented that:
"William Hill is considering the proposed acquisition of NYX by Scientific Games Corporation and no decision has been made at this time, and William Hill refutes in the strongest terms that any anti-competitive measure have been requested or are being demanded."
The gambling year of 2017 is drawing to a close, but one of its biggest business issues is just getting started as bookmaker William Hill and NYX do battle over a deal which could be worth hundreds of millions in sports betting revenue!