DraftKings has been busy this year, seeking out new acquisitions that would allow it to grow its online sportsbook and casino presence. None, however, was as big as the potential acquisition of Entain. It was initially expected that a final decision by DraftKings on whether it would seriously move forward with a purchase was coming by early this week, but Entain moved its self-proclaimed “Put Up or Shut Up” deadline. With too many variables in play, DraftKings has another month to work out all the details, but Entain expects certain conditions to be met now.
DraftKings Wants to Take Over the World
Late last month, news first surfaced that DraftKings had approached Entain and its large sports betting operations in Europe with an offer to purchase the company. The timing of the deal was a little surprising, as DraftKings was still wrapping up its purchase of Golden Nugget Online Gaming in a transaction that carries a price tag of about $1.56 billion. That was nothing compared to what the operator was willing to pay for Entain, though, with $20 billion expected to change hands. The catch was that DraftKings had an ultimatum from Entain – finalize an agreement by October 19.
That day has come and gone and Entain, which owns bwin, Coral, Sportingbet and others, wasn’t as tough as it initially portrayed. A deal of this magnitude has a lot of moving parts, and the two companies have now agreed that the new deadline will be November 16. Entain is likely holding out for more money, with a statement from the company hinting at the possibility. It said, in part, “Entain has an outstanding track record of growth having delivered 23 consecutive quarters of double digit online NGR growth, and a 3 year CAGR of 19% across 2021.”
Baby Steps Forward
Without going into a lot of detail, Entain’s statement confirmed the deadline extension, but added that certain criteria had to be met by DraftKings by the end of the day Tuesday in order for the negotiating table to remain in place. It would seem that those conditions were met, as Entain doesn’t appear ready to turn off the lights. DraftKings also issued a separate statement, confirming that it is still discussing its options with Entain.
One of the conditions, if Entain is expected to be paid more, is a commitment from DraftKings that it is ready to increase its offer. Money, however, isn’t the only roadblock, as Entain will still have to contend with its sports betting partner in the US. MGM Resorts International and Entain jointly operate BetMGM, and a takeover of Entain by DraftKings would produce a serious conflict of interest.
MGM has already acknowledged that it will fight any merger talks between Entain and DraftKings unless it is involved, and this could be where DraftKings finds additional funds. Ultimately, a three-way merger could be brewing that involves BetMGM, DraftKings and Entain; however, that would be an alliance almost certain to meet regulatory resistance unless major changes in operational infrastructure are implemented.