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Caesars Entertainmen Inc (NASDAQ: CZR) is in final negotiations to purchase U.K. betting firm William Hill PLC (OTCMKTS: WIMHY) for $3.7 billion as U.S. sport-gambling continues to grow in popularity.

Last week, William Hill confirmed receiving separate buyout offers from Caesars and Apollo Managemen (NYSE: APO). Caesars' offer comes with a 25% premium following closing share prices last Thursday, a day prior to William Hill's confirmation of the proposals.

Although William Hill has been pummeled by the COVID-19 pandemic, U.S.-based profits have surged, making up 7% of the company's revenues in the first six months of 2020.

According to a report from Macquarie Research, U.S. online sports betting and gambling is projected to generate $18 billion in revenue by 2025. The top three players in the market include Caesars with a 12% share, Draftkings Inc (NASDAQ: DKNG) at 20%, and Flutter Entertainment PLC (LONDON: FLTR) at 28%.

Caesars' acquisition of William Hill would be fitting since William Hill has an existing partnership with Caesars. Earlier in September, William Hill announced that Caesars had signed a deal with ESPN to integrate its odds into the ESPN website and Fantasy app in states where sports betting is legal.

Caesars is performing final due diligence of William Hill

In a recent statement, Caesars said the deal is undergoing final due diligence with an expected close in the second half of 2021. Granted, the deal is ongoing and an agreement has yet to be reached between the two parties.

Sports betting has grown massively in popularity following a landmark 2018 decision by the Supreme Court which opened the flood gates for betting outside of Nevada. Currently, sports betting is legal in twenty-two states as well as the District of Columbia.

Experts have said they expect sports wagering to achieve legality in an increasing number of states as governors look for other sources of revenue to make up for shortfalls caused by the coronavirus pandemic.

Under U.K. law, Caesars and Apollo have until Oct. 28 to make an offer to William Hill; a date which is rapidly approaching as September comes to a close.

On Monday, Caesars commenced an underwritten public offering of 30 million shares of its common stock. The company also plans to grant the underwriters a 30-day option to buy an additional 4.5 million shares of its common stock. Its plan is to use net proceeds from the offering for general corporate purposes including for its potentials acquisition of William Hill.

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