Great Bets

Helping You Find Your Next Bet

DraftKings Eye Entain Acquisition in the Latest Huge Gaming Takeover Bid

Businessman with Contract ProposalAs the power shift from UK to US gambling firms continues, Entain once again finds itself in the middle of a tug-of-war for its brands and services.

The firm, which operates Party Casino, Gala Bingo, Casino King and a host of other platforms, has been the subject of an £18.4 billion approach from the American sports betting company DraftKings.

It’s an interesting move given that MGM, the US gambling behemoth, has already posted two different takeover offers of the UK outfit. They have a joint venture agreement in place with Entain, which sees the latter power their BetMGM division, but so far no deal has been reached.

“It’s a major signal of intent by DraftKings to become a global online gambling powerhouse,” James Kilsby, the managing director of industry research company Vixio, told the Financial Times.

“MGM has always been the presumed suitor for Entain, and this has very much put the cat among the pigeons.”

The plot thickens, however, given that MGM claim that they would have a say on whether or not Entain sells up to their rival. ‘Any transaction whereby Entain or its affiliates would own a competing business in the US would require MGM’s consent,’ they wrote in a statement on their website.

‘MGM will engage with Entain and DraftKings, as appropriate, to find a solution to the exclusivity arrangements which meets all parties’ objectives.’

The situation echoes that of Caesars Entertainment’s acquisition of William Hill, during which the private equity firm Apollo Global Management launched a rival bid. Caesars told Hill, their existing joint venture partner, that their agreement would be torn up if they accepted Apollo’s bid.

MGM had an £8 billion offer rejected by Entain shareholders back in January, who claimed that it ‘significantly’ undervalued the true worth of the company. Many pundits expect MGM to return with an improved bid, but they would have to go some to match DraftKings’ lofty £18 million carrot.

What Would DraftKings Do with Entain?

USA and UK Flag Puzzle

These cross-Atlantic takeovers are starting to map out how the future of the gambling industry on both sides of the water might be shaping up.

Caesars made it quite clear they wanted nothing to do with William Hill’s UK infrastructure – they merely wanted their expertise and products to enhance their bid for North American domination.

So would DraftKings take a similar path? They would be buying into two established betting brands in Coral and Ladbrokes, and it’s not clear what their intentions for Entain’s online casino arsenal would be.

It could well be that those casino and bingo brands are sold on to the highest bidder – hopefully that would be an operator that would retain Entain’s customary high standards.

Of course, there would be lots of hoops for DraftKings’ proposed takeover to get through, not least satisfying relevant monopolies legislation. Analysts at RBC have claimed that if DraftKings acquired Entain it would control around 40% of the gambling sector in the United States – a higher percentage than would typically be allowed under antitrust laws.

To make their bid formal, DraftKings must submit it in writing by October 19.