Caesars Entertainment Holds 24.5% Stake at NeoGames

A Schedule 13G filing with the Securities and Exchange Commission (SEC) revealed Caesars Entertainment acquired a significant stake in iLottery provider NeoGames.

Stake in NeoGames

The SEC filing revealed that Friday, Caesars acquired 6.12 million shares of the Israeli company as part of the multi-billion acquisition of William Hill, having a 24.5% stake in NeoGames’ outstanding shares as of April 12. The US casino giant completed the $3.7-billion deal with the UK-based bookmaker in late April and immediately placed its non-US assets up for sale.

Representing just under 7% of the amount Caesars shelled out for William Hill, as of its market share closing price last week, the stake in NeoGames may open up future opportunities for Caesar. The supplier of online lottery services and solutions to a variety of state-level customers across the US is the only pure-play equity in this category.

NeoGames, which went public in November 2020, is already operational in New Hampshire, North Carolina and Virginia, and is also actively pursuing to enter Alaska, Connecticut, Maryland, Massachusetts, Missouri, Ohio and Oregon. The iLottery provider is also present in Alberta, Canada and some countries in Europe.

The SEC filing did not disclose any details as to what are the intentions of Caesars regarding the stake in NeoGames, so for the time being, it is unlikely the casino operator would pursue an active investor behavior and, similar to what hedge funds or other institutional investors do, push for new share issues or share splits to increase its holding and acquire control of the company.

Sports Betting and iGaming in Focus

Caesars has a bigger nut to crush at the moment, actively looking to offload William Hill’s non-US assets, valued around $2 billion, and with no shortage of potential suitors, including the likes of Entain, Apollo Global Management and 888 Holdings, to release funds to ramp up efforts in the iGaming and sports betting space.

With the potential presented by expanding sports betting and online casino gaming markets in the US, it is unlikely that Caesars will pursue to gain control at NeoGames in the near future and would probably rely on gains from the share price rise of the supplier of online lottery products.

Still, the possibility of Caesars seeking an increase of the $1.04 billion market capitalization of NeoGames and then acquire a control stake at the company or acquire the whole business cannot be excluded conclusively.