After weeks of speculation, some clarity has been brought in to why DraftKings’ bid for Entain fell through. According to Entain CEO Jette Nygaard-Andersen, the company was unable to facilitate a final arrangement because of the joint-venture it has helped establish with MGM Resorts in the United States.
BetMGM Is the Apple of Discord in WIthdrawn DraftKings Bid
BetMGM has been one of the pivotal sports betting operators in the United States since its inception and the company has been rapidly moving on new market shares. The entity, which is jointly owned by Entain and MGM, is one of DraftKings’ main competitors for market share and has been rapidly expanding across the sports betting and iGaming sector.
According to Reuters, MGM has refused to relent any degree of control over BetMGM, or hinder its operations by inviting a competitor into the fold, and the company reportedly argued that it would seek to acquire the entirety of the stake in if Entain chose to go ahead and accept the $22 billion bit floated by DraftKings.
While this information is not exactly surprising, as we have speculated about it ourselves, this is the first time Nygaard-Andersen admitted that Entain’s business plans might have been hindered by its stake in BetMGM and MGM’s refusal to concede ceasing an important asset to a competitor.
Nygaard-Andersen Explains the Difficulty of the Situation
Nygaard-Andersen had this to say in an interview she gave on Wednesday: “We have always been clear that the joint venture provides exclusivity for both parties for any activities involving sports betting and gaming in the United States. I think that played a role here but any transaction of this size is complicated.”
As sports betting legalizes rapidly, there are new opportunities for businesses. DraftKings has tried to acquire at least one big entity in the past, with the company almost merging with FanDuel, its main competitor, back in 2016. The deal fell through due to regulatory complications and a lack of competitiveness in the sector.
Now that the United States has legalized sports betting, the opportunities for big moves in the M&A sector are more acceptable to competition authorities. DraftKings is also one of the entities to just secure an entry in the newly-regulated New York mobile sports betting market, along with other eight license-holders.
DraftKings saw strong results in its third-quarter with the company registering a 60% revenue increase year-over-year.