William Hill working to block prospective competition
When Las Vegas-based Scientific Games Corp. reported third-quarter earnings earlier this month, executives said they were optimistic about the company’s prospects with a $631 million (U.S.) acquisition of the Canadian NYX Gaming Group Ltd. on the table.
NYX, a digital gaming provider corporately based in Toronto but headquartered in Las Vegas, has 1,000 employees globally, including more than 600 engineers, and has developed a robust sports wagering platform. NYX’s OpenBet Sportsbook system processed more than 2 billion bets in 2016.
Scientific has global contacts as a gaming equipment manufacturer and could prosper in sports betting, especially if it is legalized across the United States with the repeal of the Professional and Amateur Sports Protection Act.
The law’s repeal is a possibility next year with the U.S. Supreme Court hearing oral arguments next month from the state of New Jersey, which is waging a legal battle against the NCAA. The law prevents sports wagering in all but four states, including Nevada. Nevada is the only state that allows betting on individual games.
William Hill unhappy
But a potential rival in the sports-betting business isn’t happy with the prospective competition coming its way and is working to block the transaction.
Gibraltar-based William Hill, which has subsidiaries that have made it a dominant player in sports betting in Nevada, also is a shareholder of NYX and looks to acquire a dominant share position to vote down the acquisition.
In the past week, Scientific, NYX and William Hill have made legal and corporate punches and counterpunches against each other in advance of the Dec. 11 shareholder vote.
NYX filed a lawsuit against William Hill in New Jersey earlier in November.
When apprised of William Hill’s strategy, Scientific on Thursday filed an unfair trade practices lawsuit against William Hill and its executives in Clark County District Court.
On Tuesday, NYX announced that it had amended the purchase agreement it has with Scientific to enable a corporate takeover.
The lawsuit filed by Scientific explains how the company became aware of William Hill’s strategy.
William Hill acquired 6.8 million units of NYX stock in 2016, holding 6.28 percent of shares. In April that year, it acquired 149,600 convertible preferred shares that, if converted, could give the company a 31.9 percent ownership position — enough, under Guernesey corporate law, where the company is incorporated, to block the transaction.
Scientific officials said they had talks with William Hill and that the company demanded non-compete provisions and perpetual exclusivity rights to restrain competition.
‘Anticompetitive terms’
“While discussions with NYX were ongoing, the William Hill Group made it clear that it would attempt to block the acquisition unless it was given the anticompetitive terms that it sought,” the lawsuit says.
If the acquisition were to proceed, William Hill would receive $163.5 million, but pre-acquisition stock value would be worth about $54 million if the transaction doesn’t go through.
“William Hill is willing to forgo $109.5 million ($85.7 million U.S.) to avoid increased competition,” the lawsuit says.
NYX agreed to waive a portion of its agreement with Scientific that will now enable the company or its affiliates to purchase any ordinary, preferred or other equity securities of NYX and its subsidiaries, effective immediately.
Local William Hill officials did not comment on the matter and a representative of William Hill’s investment relations team in London could not be reached.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.
