Amaya and William Hill Merger Falls Through as Key Shareholder Vetoes Negotiations

Amaya and William Hill, two online gambling giants, officially announced their merger negotiations last week. The potential deal, which was set to be signed as a “merger of equals” and create a new company with a huge potential, is not going to happen after all.

Key William Hill Shareholder Blocks the Deal

Parvus Asset Management, a hedge fund owning 14.3 William Hill shares, made it very clear last week they were against the merger. The fund sent out the letter to the William Hill board of directors, stating they were ready to actively stand against any official proposal which would formalize the merger.

As the biggest shareholder in the company, Parvus insisted that William Hill should not waste time discussing the merger that could only further damage the brand. They did not fail to mention the fund has been supportive of the company despite its recent struggles and less than impressive performance of their shares.

The letter also mentioned the fact Amaya is currently facing a lawsuit in Kentucky and they could be on the line for $870 million if the court finds them guilty of breaching the UIGEA during mid 2000’s, when PokerStars offered their online poker services to the USA residents.

William Hill Backs Out

In the immediate response to the letter, a William Hill representative made it clear that the board will not enter any partnerships or agreements that are not supported by all major shareholders. It was a prelude for what has become official a couple of hours ago.

William Hill published an official press release, stating that they were withdrawing from the merger discussions, wishing Amaya all the best for the future.

While both companies initially believed the partnership would help them establish their respective positions in the market, Parvus Asset Management clearly did not share this view, claiming that the merger had “limited strategic logic,” insisting negotiations should come to an immediate end.

Facing the pressure from its major shareholder, William Hill board of directors decided to back out from the negotiations.

ARJEL Figures Expose French Regulation Model as a Work in Progress

While French sports betting in 2015 may have been a dog for licensees, it remains far too far a reach for most operators to pull out of the French market.

ARJEL Reports Losses

National gambling regulator ARJEL did report a collective €5 million ($5.6 million) operating loss for the country’s licensed betting operators in 2015.

The Biggest Hits

Sportsbook and online poker took equal hits, losing €7 million each for the 12 months ending December 31st.

Sports betting Struggles

Further, out of 11 total sports betting operators active in the country, only five came with any kind of operating profit in the ARJEL report, while seven of nine poker brands posting losses.

Sole Success

In fact, the only betting vertical to show a positive gain for its licensed operators in France was racing, which generated a decent €10 million in total revenues.

Yet Market Grows

However, despite the ominous figures for individual operators, the overall market is still nothing short of robust year-on-year, with turnover reaching a record €1.4 billion in 2015 for a 30% jump.

H1 Gathers Momentum

Further, the momentum of growth has only picked up, with ARJEL’s H1 figures for 2016 showing turnover for the six month period at €1.1 billion, good for a 60% year-on-year jump.

Activity Leaders

The most popular sport for French punters is football as usual, holding a 53% share of the sports betting market. Tennis was second at 20%.

H1 Losers

ARJEL identified H1 losses in online poker, down 4% year-on-year to €232 million; and horseracing, down 2% to €1 billion. Horseracing losses do have a silver lining, improving significantly from the previous year’s 7%.

Regulation Totals

The new ARJEL figures bring the total operating loss since the regulated market launched in 2010 for French-licensed operators to €471m. Sports betting is the loss leader with €222m, followed by poker (€206m) and racing (€43m

Adaptive Measures

To pass the revenue benefits onto individual French-facing operators, ARJEL suggests tax reform, expanding the variety of online products licensees can offer, and sharing poker liquidity with other European regulated markets.

Hanging Tough

As the French regulator, ARJEL’s suggestion to make things more hospitable to licensees is not likely to be lost on French legislators. Operators still standing in the French market at the end of the adaptation process should thrive.