DraftKings has walked away from a $22.4bn takeover bid for UK sports betting and casino company Entain – and surrendered its right to move again for the gambling giant for the next six months.
Just a week ago the deadline for US firm DraftKings to agree a deal with Entain was pushed back to November amid hope the multi-billion dollar settlement could be reached.
US betting companies are pumping huge sums of money into the industry as American states slowly legalize online sports betting and casino play, and the impending sale of another European firm was not a surprise.
Indeed, DraftKings had been looking to buy Entain’s successful brands such as Ladbrokes and Coral, and gain access to its wealth of gambling knowledge and industry-leading tech.
According to the Financial Times, DraftKings’ takeover proposal valued Entain at £16.4bn ($22.4bn). But in a surprise twist the Boston-founded company has backed away from a potential agreement.
Jason Robins, DraftKings chief executive, said the firm had decided against making a formal offer, stating: “We are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market.”
Exactly why the deal was called off is as-yet unknown but it does mean DraftKings cannot make another offer for Entain for at least six months. That’s because rules in the City of London dictate that broken takeover deals undergo a cooling-off period.
Entain Share Impact
The failure to strike an agreement may not impact too heavily on DraftKings but it has already hit Entain. The UK company’s share price fell 10% off the back of Tuesday’s announcement and closed the day 6% down on the London stock exchange.
The swift drop exposes just how volatile the market is when it comes to the gambling industry, where investors are right now keen to pump dollars into the United States.
Since 2018 sports gambling and online betting has been permitted in the US, albeit on a state-by-state basis. As more states free up their legislation, more European betting firms are partnering with US companies to bid for a limited number of licences.
In Entain’s case it has created a joint venture with Vegas casino brand MGM to form BetMGM, which is owned 50/50 between the two companies. Were Entain to sell to DraftKings then that would have likely caused an issue with MGM.
What Brands Do Entain Own?
Entain isn’t exactly a household name either in the US or in Europe, yet is one of the biggest online gambling operators in the world. The company is headquartered in the Isle of Man and specializes in online gambling.
Entain owns the following betting brands:
- Ladbrokes
- Coral
- bwin
- Betdaq
- Sportingbet
- Eurobet
- BetMGM
- Borgata
- PartyPoker
- Danske Spil
- Gala Bingo
- Foxy Bingo
Could MGM Bid For Entain Again?
Back in January 2021 MGM actually bid $11.1bn for Entain but the move was swiftly rejected. Whether it bids again remains to be seen but rumors MGM wants to invest more heavily in remote gambling aren’t going away.
The fact DraftKings were considering paying double that fee 10 months later highlights the profitability of gambling companies who have a foothold in the United States.
It is estimated that the US online gambling industry will expand to be worth $66bn a year by 2025.
It therefore makes sense for firms to shore up the market now by buying into established European brands if they can afford it.
Caesars recently did just that when it bought historic British bookmaker William Hill, kept its US-based operations and swiftly sold the European arm back to a European company, 888, for $3bn.
