Penn Entertainment Shares Soar as Flutter Weighs In on Potential Acquisition

Flutter Entertainment is said to be considering the purchase of interactive assets from Penn Entertainment in a notable move for the gaming industry. Flutter could team up with Boyd Gaming, which has also expressed interest in buying Penn.

Penn Entertainment Shares Rise as Flutter Weighs in on Potential Acquisition

Following this news, shares of Penn Entertainment rose 5%, while Flutter trimmed an earlier gain. Flutter’s interest mainly lies in Penn’s interactive business including ESPN Bet as the company owns popular sports betting platform FanDuel, according to TheDeal.com. However, the acquisition of these digital assets by Flutter would support Boyd’s goal of focusing on Penn’s land-based casino operations without the digital segment.

Boyd Gaming has not publicly disclosed any intentions about seeking out an acquisition deal with Penn. However, last month reports suggested that Boyd may consider bidding at least $9 billion for Penn, according to anonymous insiders. The same sources revealed that negotiations have been going on for several weeks now even though some analysts doubt if Penn would sell anything and are skeptical about Boyd’s capacity to manage such a large transaction independently.

According to analysts, Boyd is mainly interested in Penn’s traditional casinos. One way for Boyd to avoid paying too much for this division would be if a third party – like Flutter – were to buy those assets instead. If Flutter offered roughly $500 million for Penn’s digital unit, it would effectively reduce the cost of acquisition for Boyd and thus make the whole deal more attractive.

Regulatory Issues May Complicate Potential Boyd-Penn Deal

The wish to acquire Penn’s digital business may seem logical. ESPN Bet currently has about a 6% share in the online sports betting market while the Hollywood Casino brand under Penn has a significant presence within the iGaming sector. These assets alone could greatly strengthen Flutter’s portfolio in line with its expansion strategy.

However, there are many obstacles ahead for any potential agreement between Boyd and Penn even with involvement from Flutter. For one thing, there will likely be large regulatory issues given that both companies operate casinos within the same regions where they compete against each other directly.

This means gaining approval from gaming regulators in at least ten states as well as Federal Trade Commission clearance which could make the transaction quite complex. In addition, Midwest and Southern regions might require asset sales by either or both parties so as to satisfy local regulators’ concerns but current high interest rates coupled with slow consumer spending trends across some gaming markets would further complicate matters.