DraftKings’ (NASDAQ:DKNG) pursuit of Entain Plc (OTC:GMVHY) could follow centered around getting the target’s technology capabilities, potentially putting MGM Resorts International (NYSE:MGM) on the lurch for its own sports wagering tech stack.
That thought is mentioned by RoundHill Investments co-founder Will Hershey, who notes that MGM may non live capable to cube a deal for Entain’s sports wagering technology platform.
DraftKings mightiness really live after Entain’s engineering underpinning the BetMGM offering, which may settle out of doors the range of MGM’s blocking rights,” said Hershey in a Saturday note. “In such an outcome, DraftKings would pose MGM in a difficult billet of needing a unexampled tech stack, which hypothetically could final result inward MGM making an acquisition of their own.”
Last week, DraftKings stunned the gaming industry, floating a $22.4 1000000000 hard cash and stock bid for Entain. The mark confirmed receipt of that proposal and that, years earlier, it rejected a $20.5 one thousand million auction pitch from the Boston-based sportsbook operator.
The MGM Entain Equation
Entain and MGM are 50/50 partners on the BetMGM venture, which is now the second-largest online sportsbook operator inwards the US and the upper side iGaming fellowship inward terms of securities industry share.
BetMGM is supported by Entain infrastructure and technology, spell the marketing position is goaded past MGM and its enviable make recognition, participant database, and portfolio of land-based gaming venues. The gambling casino giant said it’s monitoring the DraftKings/Entain talks and that it’s willing to piece of work with those ii parties to amount to an amicable resolution. But should DraftKings pursue an all-out takeover of Entain, including the BetMGM stake, MGM clearly states such a sell needs the operator’s approval.
MGM, itself a previous suitor for Entain, wants replete(p) verify of the BetMGM unit, and it may live able-bodied to let that without having to pogey come out a great deal cash. Speculation is swirling that the gambling casino accompany could simply purchase out Entain or pursue an initial public offering (IPO) of the online gaming enterprise.
If DraftKings is pursuing Entain for technology and to bolster up its international exposure, it may follow compelled to work with MGM on a resolving for BetMGM. DraftKings hasn’t publicly said if it’s pursuing Entain purely for its tech stack, or if BetMGM is essential to getting a trade done.
Entain’s Other Assets
In improver to the BetMGM post and its back-end capabilities, Entain brings a great deal to a greater extent to the table. For example, it’s ace of the largest sports betting companies inwards the UK and Europe by right smart of its Coral and Ladbrokes brands, among others. Additionally, it’s ane of the largest operators inwards Australia — a suitable sports betting market place that DraftKings lacks exposure to. It’s non yet illuminate how DraftKings plans to hold those businesses should it at last gain Entain.
“Entain’s other assets, which include U.K. brick-and-mortar betting shops (i.e., Ladbrokes Coral) and its non-U.S. online betting brands (i.e. bwin, SportingBet) upward for grabs. It’s unclear if DraftKings has a tangible want for those assets, despite the attractive congeneric multiple, as they would potentially thin out DraftKings’ pure-play US ontogenesis story,” said Roundhill’s Hershey.
There is some talking that if DraftKings is successful inwards its quest of Entain, the suitor testament vendue away the target’s UK betting shops inward a dealing similar to what Caesars Entertainment (NASDAQ:CZR) late did with William Hill’s international assets. In fact, such a operation would potential get out some of the same parties that kicked the tires on William Hill’s High Street shops.
Under UK law, DraftKings has until Oct. 19 to work a formal proffer for Entain.