What's going on?
The billionaire owner of the Golden Nugget casino chain approached rival Caesars Entertainment on Wednesday with a proposal to combine the two businesses – and investors gambling on a deal sent Caesars’ stock up 14%.
What does this mean?
Caesars has been looking to grow ever since emerging from bankruptcy last year – it bought Centaur Holdings and is currently exploring a $3 billion bid for Jack Entertainment. The gambling giant is keen to improve profitability – and with Golden Nugget, it could be on to a winner. Adding to its current suite of 49 casinos might afford Caesars some cost-cutting synergies, given that it’s already a player in four of Golden Nugget’s five locations.
It’s not always easy being the house: British gambling company Rank Group has suffered from a lack of high rollers in its gaming halls and – shock horror – a drop in bingo attendance. On Thursday, Rank reported a sales drop of 5% on last year. Eyes down!
Why should I care?
For markets: Shuffling the deck.
Caesars isn’t alone in throwing up pairs. GVC and Ladbrokes Coral tied the knot in March, while two other US gamblers joined forces just this week. According to analysts, gambling shares are close to five-year lows – which might explain why operators are teaming up to build contract bridges.
The bigger picture: Enter the internet.
Online gambling has been growing steadily since the world got webbed (the first digital casino launched back in 1994), and it shows no signs of slowing down. The internet has disrupted industries of all stripes (Amazon, case in point) and for real-world casinos, the prospect of having to get people off their tablets and onto the tables may well create feelings of Fear and Loathing.