Gambling-related stocks and shares across the world have tanked hard in recent weeks. As the reality of the fast-moving coronavirus sets in, stock markets have collapsed, and some of the biggest casino and gambling stock prices have fallen off a cliff-edge.
One of those stocks is William Hill (WMH). It was trading at £180.90 per share on February 2nd, 2020, and as of the time of writing, it’s trading at £40.63.
While most investors are running for cover during the viral epidemic, others are swooping in to take advantage of bargain prices on what they believe to be strong companies in the long-term. One such investor is billionaire gambling tycoon Fred Done, founder of William Hill’s rival firm Betfred.
The Telegraph reported that Done had purchased £25 million worth of William Hill shares so far, and he’s only warming up. He’s planning to buy more shares as the market rout continues. With this recent purchase, Done is now one of William Hill’s largest investors with a 3.03% stake in the betting firm.
Why would the billionaire owner of a rival firm take such a colossal gamble on one of the hardest-hit gambling stocks at this time? Done has previously said that he believes that William Hill is one of the best positioned British firms to take advantage of the liberalization of the US sports betting market.
Why Have William Hill Shares Tanked so Hard?
Lots of UK gambling stocks have dropped massively in the past several weeks, but few, if any, have been hit as hard as William Hill. While iGaming operators like Playtech have seen their share prices slashed by more than half, and William Hill’s chief rivals such as GVC Holdings is down from a high of £931.60 at the start of February to just over £350 at the time of writing, William Hill’s drop is orders of magnitude greater.
There are a few potential reasons for this:
Most major sports events have been cancelled around the world. It’s unclear when any form of normality will return. Events as far out as the 2020 Olympics in Tokyo could be cancelled or postponed. William Hill does offer casino games online, but it’s best-known as a sports betting brand.
The brand has recently received criticism in major financial publications like the Financial Times. This isn’t going to do any favours for the firm’s share price.
Imagine having thousands of betting shops with over 12,000 employees and suddenly finding out that most sports events are off for at least the next financial quarter, and perhaps longer. It’s a financial calamity like the firm has never faced before.
If the UK goes into full lockdown in the face of the coronavirus epidemic, all of the company’s betting shops may have to close indefinitely. Firms like Bet365, which don’t have physical betting shops, are in a much better position to shed staff, cut costs, and ride out the storm.
Could Betfred Emerge as the Beneficiary of William Hill’s Misfortune?
Betfred does have 1,650 betting shops in the UK, so it won’t escape the incoming financial pain. However, many pundits are beginning to wonder if Fred Done’s purchase is the beginning of a takeover attempt.
In 2019, Done did make an offer to buy all William Hill betting shops. The offer was ultimately rejected. Could the billionaire tycoon be in a stronger position now that he’s one of the company’s largest shareholders? Time will tell.
Fred and Peter Done own Betfred. The two brothers used their winnings from betting on England to win the World Cup in 1966 to open their first betting shop the following year. It initially expanded in the Northwest of England, but these days, it’s a recognized brand all over the UK with 1,600 high street betting shops and a well-oiled online gambling machine.
Should You Take a Punt on UK Gambling Stocks?
I’m not an investment advisor, and I can’t tell you what you should or should not buy. However, I can tell you that there are several gambling companies that I am watching closely. When I feel the moment is right, I’ll be taking a stake in these companies.
William Hill – If it’s good enough for a billionaire businessman who understands the industry inside out like Fred Done, it’s good enough for me. Enough said about that.
Flutter Entertainment – This gambling megafirm is the result of a merger between Paddy Power and Betfair. Its stock price has shed over £3,000 per share, almost a third of its value, since coronavirus panic set in.
Playtech – This is one of the leading providers of online casino games. It will take a hit short-term if mass layoffs occur and world economies tank, but Playtech could benefit from a transition away from high-street gambling to online gambling in the coming months. Playtech was trading at £343.20 per share last month and is now valued at £141.90.
IGT – Switching over to IGT on the New York Stock Exchange, I’m going to buy stocks in IGT. This is one of the largest suppliers of online and land-based casino games in the world. A month ago, IGT was trading at $14.34, and today a slice of the IGT pie will cost you just over $4.
Wynn Resorts – Las Vegas has gone into lockdown due to the coronavirus, and social distancing measures have hit many casino stocks hard. I believe that Wynn Resorts isn’t going anywhere in the long-term, so I’m going to buy stocks for $52 that would have cost me over $130 a month ago.
When will I buy in? Whenever the volatility of stock prices settles down and after the stocks trade sideways for a week or two. There are already signs that long-term investors are buying (all of these stocks have bounced significantly today), but I think more pain might be on the way as the full extent of the coronavirus emergency takes hold in western countries.
I am going to average in. That means I’ll buy some now, and I’ll buy some later, and I’ll ultimately get an average low price.
I can’t emphasize this point strongly enough — all investing is risky. This is an unprecedented situation, and we may see some household names disappear if lockdowns last longer than a few months. Betting on these stocks is gambling and you might lose everything. I’m not telling you to do so, but I am planning to buy them myself.
Based out of London, I began freelance writing for the UK section of GamblingSites.org in October of 2019. Having worked in the gambling industry for over 10 years, I now have the pleasure of adding this site to my list of accomplishments as a casino writer. ...
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