Gambling operators in the United States have been put on notice: it’s not beyond the realms of possibility that Entain, MGM and DraftKings could yet pool their resources in some kind of triple merger activity.
Entain, who turned down a takeover bid from joint venture partner MGM earlier this year, is now the subject of a proposed acquisition from DraftKings, who have bid a reported $22 billion for the British outfit, whose brands include Party Casino, Gala Casino, Ladbrokes and Coral.
That revelation must have been something of a bombshell for MGM, whose own $11 billion bid was laughed off as ‘significantly undervaluing’ the outfit.
On the face of it, that leaves Entain shareholders with a straightforward decision to make – accept DraftKings’ offer or walk away….however, MGM’s CEO Bill Hornbuckle has come along to throw a curveball into the mix.
Appearing at the Global Gaming Expo, an event for the casino sector that attracts guest from all over the world, Hornbuckle was asked for his take on the speculation of DraftKings’ imminent takeover.
He revealed that should Entain agree to the American firm’s offer, then MGM would launch a full acquisition attempt on BetMGM – the partnership between the casino specialist and Entain.
That, confusingly, would make the trio partners in an indirect fashion. When quizzed about the future of BetMGM, Hornbuckle revealed:
“We’d have to come to some resolve. We have 50 % now. I would like more. I would need more.”
Any such agreement would likely see BetMGM licensing DraftKings’ proprietary technology, including sportsbook software, from DraftKings. Of course, on the flipside, DraftKings could takeover Entain….and then refuse MGM’s offer for an increased stake in BetMGM or any kind of working relationship whatsoever – knocking a rival down a peg or two.
It’s all very incestuous and confusing, but this is a love triangle that could have severe ramifications for the gambling industry in the United States and beyond.
Who Dominates Who in US Gambling Gold Rush?
The trend for consolidation and acquisition is born out of one desire – to be in the right place, at the right time, with the right assets when online gambling is opened up to a wider audience in the US – which now seems to be more of a question of when, not if.
Entain’s revenue in 2020 was £3.5 billion, with an operating gross of £419 million, and so right off the bat you can see why the British firm is an attractive proposition.
But it’s not just the financial bottom line that the American vultures are circling for. Entain have developed their software and tech over many successful years, and that’s what MGM and DraftKings – relative novices in the online space – want to tap into.
For context, DraftKings’ revenue in just the second quarter of 2021 was $298 million, and with MGM’s financial position weakened by the closure of many of their casino properties since the spring of 2020 – some of which are only just opening up again now, they simply don’t have the muscle to battle with DraftKings for prominence.
So the latter has an open shot at Entain….but will the deal on the table be enough to persuade the firm’s decision-makers?