The US online casino industry could see a major shakeup soon as DraftKings is looking to make a major move.
Earlier this week it was confirmed that DraftKings made a $22 billion offer to Entain to take complete control over the company.
The purchase would be made by using both cash and stock options, but it would be a massive move for both companies. The initial offer from DraftKings of 2,500 pounds per share, but DraftKings has since raised that offer to 2,800 pounds per share.
The announcement of this offer came out pretty quickly, but this isn’t something that is going to be in the news a lot until a decision is made. Entertain has stated that it will be discussing the offer with its board of directors, and an announcement will be made at a later date.
Entain is a company in the UK that has assets in both sports betting and online and mobile casino gambling. DraftKings has made it clear that it is interested in both forms of assets as it looks to build up its portfolio even further.
DraftKings would also receive technology and data services from Entain through this purchase if it wanted to, but it already has a partner in that space. This is a similar deal as to what Caesars and William Hill just completed only a few months ago.
News of this potential deal had differing effects on the stock prices for each company. The price per share of Entain went up more than 16 percent while DraftKings saw its stock drop nearly five percent.
DraftKings has continued to be aggressive in seeking out deals, but paying more than $22 billion would be a major gamble. There is a chance that DraftKings could be looking to get some of that money back by selling some of the international assets back.
A Move to Catch Up
DraftKings has not had any trouble becoming a leader in the US sports betting industry, but it has started to fall behind when it comes to online casino gaming. While DraftKings would be received sports betting assets from Entain, the real benefit would be gaining expertise and online casino companies.
FanDuel and BetMGM are currently the leaders in online casino gaming in the US, and both companies are also strong in sports betting. DraftKings has been looking for a way to catch up, and this would be a costly, but effective way to do so.
The problem with this offer is that Entain owns half of BetMGM, along with MGM. It’s not likely that MGM will allow this purchase to take place, but it could seek to buy out Entain and control the entire BetMGM company.
On the flipside of that, MGM actually made an attempt to purchase Entain earlier this year, but they only bid $11 billion at the time. Entain quickly rejected the offer and noted that it was worth more than that, and the gamble paid off after this latest offer came in.