William Hill plc has struck a deal with the US casino operator Eldorado Resorts.  The influential Lex columnist of the Financial Times said of the deal “party pooping is a wiser response than cork popping.”

Lex goes on to say that under a 25-year deal William Hill is handing over 1.6 times its stock – worth $50m – plus a 20% stake in its private US subsidiary, valued at $100m.  William Hill will be able to market to Eldorado’s 23 million customer base in six new states.  The shares were up on the news and Ruth Prior, William Hill’s Chief Financial Officer, purchased £100,000 worth of shares at 258p.

According to the Financial Times, Eldorado Resorts Inc, lost US$ 43m in 2017 but has done better over the last four quarters with profit of US$ 111m.  Eldorado has total debt of US$ 2.1 billion.

Eldorado has 21 properties: three in Nevada where William Hill is already licensed, two in Louisiana, Colorado, Iowa, Pennsylvania and Mississippi, one each in West Virginia, Illinois, Ohio, Florida, and four in Missouri.

The total population of those states (excluding Nevada which already has sports betting) if sports betting and/or e-gaming is legalised is 82 million people.

Perhaps William Hill has found what eluded the Spanish in their search for gold in El Dorado.  But much rests on state legislation and the tax rate. If some states choose not to licence sports betting at all, restrict it to land-based operations, or choose an onerous tax rate, or the cost of regulation and licence fees in each state are too high, William Hill will have bet a lot on a business that may only have sports books in ‘drive to’ casinos.