View from the City: what does recovery look like for operators as lockdown eases?
With restrictions easing and sporting events back on the agenda, how are operators positioned for recovery? Hattie Dreyfus, associate partner at Hudson Sandler, analyses the latest market movements
It’s been a busy month for operators as the government took the first tentative steps to easing lockdown restrictions and announced efforts to boost the UK’s flatlining economy. Betting shops were given the green light to open their doors to customers on 15 June, earlier than previously expected. Bookmakers welcomed the news, which came just in time for Royal Ascot, held behind closed doors. The return of the Premier League and EFL Championship provided further positive news for the bookies and match-starved football fans alike, offering a glimmer of hope that the economy is regaining some confidence. Encouragingly, William Hill’s update on recent trading revealed positive trends since the easing of restrictions and initial return of key sporting events.
Meanwhile, operators seized the opportunity to tap investors for cash to manage the impact of Covid-19 and strengthen balance sheets. Flutter raised more than £812m through a 5.5% placing to accelerate its US expansion plans, reduce debt and give further flexibility to capitalise on potential market opportunities. With analysts suggesting the pandemic will further accelerate the regulation of sports and online betting across the States, the fund raise will provide the behemoth with additional firepower to gain market share in the region.
Following in Flutter’s footsteps, US expansion was also included in the rationale for William Hill’s placing which raised more than £224m. The company said the proceeds would also provide a buffer for further regulatory or economic disruption. In the event of the implementation of a £2 online stake limit, this additional financial headroom will be welcome news to shareholders.
So, with green shoots appearing in the wider economy, investors will be watching how the industry copes with the ‘new normal’ and the roadmap to recovery. In the longer-term, all eyes will be on which operators are able to capitalise on some of the potential market opportunities, including the opening up of the US market, changes in customer behaviour and the shift to online, as well as likely sector consolidation.