Entain had previously spurned two approaches from MGM Resorts International, with who they have a partnership in the US; BetMGM – with their best offer of $8 billion being swiftly rejected.
The US online gambling market is starting to gather serious momentum, particularly with several states having legislation passed over the last 12 months and Caesers takeover of William Hill earlier this year, which appears to have started a snowball effect as US rivals grapple for market share.
Can Entain resist such a bid?
There is no doubt that the UK-owned conglomerate is the largest in the industry, with over 20 brands to their name, including Coral, Ladbrokes and Bwin being their flagship names. While they fought off MGM Resorts International earlier this year, the bid from DraftKings is a marked improvement and they may not receive a better one.
However, Entain has an astute acquisition strategy of their own and in recent months have been moving into new European markets as they strive to add even more value and assets to their firm.
A company statement from Entain revealed: “The board of Entain confirms that it has received a proposal from DraftKings to acquire Entain, the consideration for which would include a combination of DraftKings stock and cash.”
Meanwhile, Nicholas Hyett, an equity analyst at asset manager Hargreaves Lansdown was able to shed more light on the proposal: “It is Entain’s US sports betting venture with MGM that’s drawn DraftKings’ eye.
He continued: “Rapid growth in a market which is itself exploding makes Entain hot stuff. A subsequent spin-off or sale of more mature assets, as we saw with William Hill, would probably follow.”
Who are DraftKings?
Predominantly, DraftKings were one of the first brands to shake up the fantasy sports market by introducing a day-betting element which, at the time was seen as a loophole in the US market that prevented online gambling.
Since then, they have launched their own sportsbook and, armed with investment are growing rapidly with ambitions to challenge the biggest players in the industry.
Their potential capture of Entain would send shockwaves around the US market and make them very hard to compete with in terms of the industry share. The stumbling block for them at the moment is whether MGM agrees to the deal, with Entain needing their approval for any sale of the whole entity.