There are now just two horses in the race to buy William Hill Australia. The Australian Financial Review reported Friday that Paddy Power-owned Sportsbet and the Stars Group’s newly acquired CrownBet are still in the running, after Ladbrokes and Bet365 fell at the first fence.

Sportsbet and CrownBet are courting William Hill Australia

Two-Horse Race: Sportsbet and CrownBet are courting William Hill Australia as they look for consolidation in what has become a tough market. Only this week, CrownBet itself was acquired by PokerStars parent, the Stars Group. (Image: Vince Caligiuri/Getty)

AFR understands that all four suitors submitted bids by Monday’s morning’s 8am deadline but only Sportsbet and Crownbet have been given access to black box due diligence to proceed with the process.

Offers are firmly under wraps but the unit is believed to be worth around AU$200 million ($155 million). AFR sources say that the winning bidder will probably be announced sometime next week.

A day after CrownBet reportedly submitted its bid, PokerStars parent, the Stars Group, acquired a 51 percent controlling stake in the business from James Packer’s Crown Resorts. The takeover process will proceed with minimal disruption to CrownBet’s corporate structure and is unlikely to have any impact on the William Hill bid.

$333 Million Write-Down

William Hill Australia generated AU$201.1 million in gross gaming revenues ($156 million) and a AU$29.9 million ($23 million) operating profit in 2017, according to figures reported last week.

But the William Hill Group was forced to write down the value of the business, declaring a $333 million impairment charge, which dragged the group’s overall earnings into the red. The devaluation is largely due to Australia’s ban on credit betting, which came into force earlier this month, but a ban on in-play betting, new taxes and advertising rules are also expected to take their toll.

The country is threatening to implement a point-of-consumption tax, which will subject betting companies to taxation in each of Australia’s six states, rather than just the state in which they are licensed.

Market Will Consolidate

During an earnings call last week, William Hill CEO Philip Bowcock noted that the Australian business “took a higher level of bets using credit than others” and lamented that Australia was “a different place” when it entered the market in 2013.

Sportsbet and CrownBet will also be facing these new regulatory challenges over the coming year, which is why consolidation with William Hill makes a great deal of sense, allowing them to achieve greater scale and generate cost savings.

Last year Sportsbet emerged as the country’s biggest corporate online bookmaker with an estimated 15 percent of the betting market.