When delving deeper into the background and status of betting companies, generally speaking it can be quite a whirlwind of information. Most of it isn’t really something that the everyday bettor would hold all that much interest in. However, it may be worth taking a look at the private or public status of a company. And that’s what we’re here to do today. Is there an actual difference between how they operate depending upon whether they’re private or public?
Generally speaking, as long as the company provides betting on your favoured sports or games (and are prompt with pay-outs), it doesn’t really matter. Ownership details tend to be placed to one side and all is usually fine and dandy. However, there are some punters who will take notice of the private or public status of a company. And it’s not uncommon to find these gamblers taking full advantage of the possibility of investing their own funds into a public company. We’ll get into this a bit more later, but such bets can have quite the nice long-term pay-out attached to them.
Of course, there are both advantages and disadvantages to being both private or public, there is nothing that makes one specifically better than the other. A public company will likely find it easier to raise funds, although is also at the behest of shareholders. Meanwhile, in terms of a private company, it may be harder to raise funds, but it won’t have to answer to as many people with regard to decisions and changes. This leads to quite intriguing thoughts regarding gambling companies.
Differences Between A Public & Private Company
| Company | Public/Private | Biggest Brands | ~Revenue |
|---|---|---|---|
| Entain PLC | Public | Coral, Ladbrokes, Gala | £3.7 Billion |
| Flutter Entertainment | Public | Betfair, Paddy Power, Poker Starts | £6.0 Billion |
| Bet365 | Private | bet365 | £3.0 Billion |
| Kindred Group | Public | Unibet & 32Red | £1.2 Billion |
| Betfred | Private | Betfred | £800 Million |
| 888 Holdings | Public | 888 Sport/Casino, William Hill, Mr Green | £600 Million |
It doesn’t take a genius to understand that a private company is exactly as its name suggests. It’s privately held, meaning that the founders of it or the management team own everything there. Private investors may sometimes be involved in it, but everything is kept private with these specific people. In this case, any funds for growth of the company must be raised from within, and this is the key point surrounding private companies.
A public company is one that trades on the stock market, and this means that it’s able to increase its funds by selling any stocks or bonds this way. 888 Holdings is a publicly traded company on the London Stock Exchange, for example. The same is true of Entain and Flutter, and of the software developer Playtech.
With regard to those stocks, these basically refer to a share of ownership in the company. Bonds, on the other hand, are basically loans that are taken from investors. Obviously, these will need to be paid back, and with interest on top. These do not involve the surrounding of shares in the company, though. And as their respective company types suggest, the dealings of private companies can actually remain private, whereas those of public companies cannot.
Yet, because public companies are public, they’re able to raise large amounts of capital, which can assist with expansions into new markets, buying other brands, and so on. This happens by the company offering shares on the stock market, and the capial income is then theirs to play with as they choose. However, the other side of this dictates that a public company is liable to come up against much more stringent controls coming from those involved. This isn’t something that private companies have to deal with, as they can’t offer shares to the public.
Public Betting Companies – Advantages
Operating as a public gambling company can bring various advantages with it. Pretty much the best example that can be given of this is by taking a look at the United States of America. In 2018, it seemed as though the sports betting market was going to go through a boost and open up across the country. This meant that the share price of public betting companies who were in the position to take advantage of this significantly increased.
At the time, market analysts had the belief that the US market would actually be worth four times more per year than that within the United Kingdom. William Hill was a publicly traded betting company at the time, and it was one of the various companies to see its share prices go through quite the boom. Entain PLC (formerly GVC) and Flutter Entertainment were two others who experienced the same thing. At the time, William Hill’s shares had fallen to a five-year low, thanks to the introduction of new maximum stakes on fixed odds betting terminals (FOBTs) in the UK. So you can imagine that this increase in the value of the company’s shares was a welcome change.
Reports of UK companies being ready to benefit from the continued interest in the US sports betting market were still coming in years later. This saw the three previously mentioned betting companies have their price targets raised, due to their respective interests in (or value to) the overseas market.
As it happens, William Hill was the best-placed of all brands to benefit from this. Casino executives from MGM and Hard Rock suggested that the industry could be worth billions of dollars every year, and William Hill was already quite well-established in the US gambling market of Las Vegas. Furthermore, it had announced that it was set to be the exclusive sports book data provider for CBS Sports Digital. That provided it with access to more than 80 million users per month. Add to that a partnership with Eldorado Resorts, and William Hill was on a great path forward.
So great in fact, that Caesars entertainment swooped in and simply bought them out for £2.9 billion, took the parts of the business they wanted (which was mainly the tech abilities and the American assets), then sold the rest off to 888 who own the brand now. This means William Hill is no longer a publicly traded company in itself, but is part of the 888 portfolio, which is publicly traded. So buying shares in 888 is to also buy shares in William Hill.
Could the same have happened if the company was a private one? It is a fact that the biggest gambling companies in terms of turnover are pretty much all public, which tells you, for expansion at least, that being public is more useful to grow.
Public Betting Companies – Disadvantages
Obviously, it’s great if you’re able to expand your business with public funds, but there are also downsides to trading in such a way. It is actually quite an expensive route to take initially. Furthermore, going public also ensures that part of the company which was set up by the original founders will effectively be sold to a stranger. Sometimes, a loss of control can be felt in these circumstances.
A publicly held company doesn’t have the power to make autonomous decisions on anything. All minority shareholders can have their say on how the company is managed, and this includes decisions on who is on the board of directors. An increase in regulation will also be experienced, as companies have to meet certain criteria so that they can actually be publicly listed. Included alongside this is an enhanced level of reporting on decisions being made relating to a whole collection of issues.
What’s more, a public company must constantly think about its short-term plans. Returning to that reduction in the maximum bets on FOBTs that occurred in 2018, this affected betting companies as a whole. An increase in the Point of Consumption tax also took place to cater to the losses from this change, and therefore, public companies experienced a hit to their stock value. Prices did not take into consideration the strong possibility of future growth.
In this situation, short-term thinking can result in people losing their jobs, being made redundant and other similar outcomes. These things are much more resistant within private companies. Public companies essentially go from quarter to quarter, with profits in these fourths of the year being the prime and essential focus. This is why you might notice private companies have a more consistent approach where public versions are often chopping and changing to match demand.
Private Betting Companies – Advantages
The biggest pro about having a private company is that every single move you’re making isn’t known by the public. This is especially helpful in an industry where each company tends to follow in the footsteps of those made by others before them. That’s all to do with not wanting to miss out on a specific market or not wanting to be left behind by the forerunners. As the name suggests, being a private company affords much more privacy. Financial results do not need to be provided to the public for this reason.
Of course, the short-term thinking that is necessary via public companies is not something that affects private companies. Therefore, these companies can have much more of a long-term goal in mind, and work on that over several years. Of course, the short-term won’t be ignored in any way, but private companies aren’t particularly living from each quarter of the year to the next where decisions are concerned. Essentially, a private company is allowed to do what it wants when it wants. There’s no need to consult anyone else outside of the private company itself.
For the punter or player one of the biggest advantages is you know who owns and runs a betting site. Public companies are constantly merging or being acquired by even bigger companies (such as Entain, an investment fund that now owns Coral, Ladbrokes, Gala and a load of other brands) that have different aims. This can result in sites constantly changing, which a lot of bettors do not like.
Private Betting Companies – Disadvantages
Even though it’s great to not have to reveal financial circumstances to the public as a private company, there’s also the fact of it being considerably harder to raise funds in the first place. If a private betting company wants to expand or develop in one or more areas, it takes a lot to gather the funds to be able to do so. Of course, private investors can involve themselves in this, and they’re likely to want to do that for a good return. However, if you were privately investing your money in a company, you’d also want to know what it was being used for, right?
Another drawback of being a private betting company, is that there is less public accountability in place. Private companies have the ability to do what they choose and when they choose, and in most cases, it doesn’t really matter what the public think. You only need to look at Denise Coates, the founder of popular site Bet365. She took home £323 million in a single year (roughly £1.3 million every single day). That marked the largest ever UK company director pay-out and many people saw it as being quite obscene. However, Ms. Coates does pay full income tax (at a higher level than if she simply took dividends) and donates to certain charities and foundations. She even gave a £10 million grant to the University Hospitals of North Midlands (UHNM) Charity, supporting staff and patients during the coronavirus pandemic.
Naturally, in this instance, Ms. Coates didn’t have to consult with anyone before paying herself that figure. Because Bet365 is privately owned, everything can be done straight out and nobody has the ability to counteract it, as it isn’t publicly traded.
Which Is a Better Way of Trading?
If you look at the top six betting companies in terms of revenue, then you’ll see that only two of them are private. They exist in the form of the aforementioned Bet365, and Betfred. The four remaining ones are all public betting businesses – Entain, Flutter, Kindred and 888 Holdings.
The main difference here is that the public companies all tend to be in possession of lots of brands, all operating under a single holding company. Obviously, this is able to be done perfectly, as they are able to raise capital easily, with support for acquisitions and mergers being generated in the process.
Of course, if you’re looking at this from the eyes of a gambler, then bigger doesn’t specifically mean that a company will be better. Private companies are actually a lot more consistent in their approach overall, so as a user of such a company’s site, you always know what you’re getting involved in.
It’s unfortunate to say it, but public companies do tend to go through various changes quite swiftly. And this is all to do with bringing in as much profit as possible, so you’ll notice that promotions at sites like Coral and Ladbrokes will frequently change. These sites are only looking to run high-quality offers that they know will bring in large amounts of money due to them being publicly traded. Yet, these companies can also be sold off and swiftly change hands, falling into the lap of new owners. They can then change the brand practically overnight for the user, which can be quite jarring at times.