DraftKings offered to acquire the UK-based sports betting and gambling company Entain. Entain has a 50% stake in BetMGM and operates the Ladbrokes, PartyPoker, bwin, Sportingbet and Coral brands. CNBC’s sources report the offer is for $20 billion in DraftKings’ stock and cash.
Investors quickly reacted to the news. Entain’s shares rose nearly 20 percent, while DraftKings shares dropped as much as 8 percent. Meanwhile, Entain is playing coy about a potential merger.
Entain Acknowledges DraftKings Offer
Earlier today, Entain filed a statement with the London Stock Exchange, acknowledging it had received a stock and cash offer from DraftKings. The statement did not disclose the amount of the offer. It did, however, give DraftKings notice that it had until Oct. 19 to either make an offer according to the UK Takeover Code (Rule 27) or withdraw the offer.
Earlier this year, Entain rejected an $11 billion offer from MGM Resorts International. The two companies were already partners in their BetMGM venture. But Entain felt MGM grossly undervalued the company and dismissed the offer out of turn. At nearly twice the price, however, Entain may feel more respected by DraftKings offer. But so far, the company is mum on the likelihood of a deal.
Will Sports Betting Combo Be Too Big?
After the Supreme Court lifted the US ban on sports betting, the sportsbook race for territory began. As a result, DraftKings currently operates in 14 states. Meanwhile, that number is likely to grow as legalized sports betting continues to expand across the country. But what was initially a race for territory has quickly turned into a grab for monopoly control.
Consolidation in the America’s fledgling sports betting industry has already begun. Late last year, Flutter Entertainment took a 95% stake in the sportsbook and fantasy sports company FanDuel. Flutter also operates Paddy Power, Betfair and FOX Bet.
In April Caesars Entertainment acquired William Hill. Caesars kept William Hill’s US assets, while selling its international assets to 888 Holdings. Before its acquisition by Caesars, William Hill bought CG Technology’s sportsbooks in Nevada and the Bahamas.
At some point, however, sports betting’s merger mania could run afoul with regulators. Up until now, the rapid US expansion of sports betting mitigated concerns about monopoly power. But the potential deal between DraftKings and Entain could change that.