At the end of November and the beginning of December, rumours claiming that BetMGM is looking to expand its presence in the online gambling market of the US emerged. Also, some recent claims say that MGM is mature enough to finally end its five-year agreement with the UK gambling giant Entain by taking over the company.
Entain is one of the largest British gambling and bookmaking websites. A large number of US customers may not be currently familiar with the brand but they are very likely to recognise a few companies owned by the operator, including Party Poker, Ladbrokes Coral, Sportingbet, and Bwin.
As previously reported by Casino Guardian, Entain is also a 50-50 partner with MGM for their joint BetMGM venture. The deal was finalised in 2018 after each of the two companies contributed $100 million each. Under the terms of the agreement, Entain was supposed to provide all the digital gambling options and lines for MGM that was expected to primarily focus on its physical casino venues.
Entain, which was previously known as GVC Holdings, was looking to step into the US market after the Supreme Court decided to strike down the Professional and Amateur Sports Protection Act of 1992 (PASPA) back in 2018, so its partnership with a local betting and gambling operator was probably supposed to help it do so. According to some expectations that were unveiled at the time, the US online betting sector would take some time to take off.
UK Gambling Operators Willing to Establish Foothold in the US Sports Betting Sector Despite Increasing Competition
The US sports betting sector, however, has literally exploded with a large number of US states already offering mobile sports betting services. Market experts say that in 2024 more than 30 US states will offer licensed and regulated online sports betting services.
For the time being, BetMGM is usually a leading sportsbook or one of the leading operators in online casino wagering.
Online casino gambling and sports betting continue to rise in popularity, and if US states manage to work out gambling compacts with some of the Native American tribes, the number of states offering such services could rise even more.
The main competitors of the British gambling giant Entain – William Hill and Flutter Entertainment – have both already entered the US market, with both of the companies having joined forces with local gambling operators. William Hill has joined forces with Caesars Entertainment, while Flutter Entertainment partnered with Golden Nugget in New Jersey. Their ownership of the TVG horse racing network is also expected to help expand their presence in the local gambling market.
Despite the fuming competition in the US sports betting and gambling sector, BetMGM revenues have managed to exceed preliminary projections. In 2021, the joint venture of Entain and MGM generated net revenue of almost $850 million. According to expectations, this figure is likely to double in 2022. Although BetMGM is still not profitable, MGM said that it expects to see its joint venture with Entain generate profits in 2023.
Taking Over Entain Would Help MGM Gain Better Presence in the International Online Gambling Market
As a source with close knowledge of the situation, MGM has realised that it made a partnership mistake almost immediately after it joined forces with Entain. Around the beginning of the Covid-19 pandemic, the US gambling company probably felt that the best option to gain full control of the promising joint venture was to simply take over Entain. In addition, it would be more cost-effective to take over the 50% share of BetMGM that is currently owned by Entain.
While it remains unclear what the US gambling operator plans to do with the non-American assets of the UK gambling giant, some market experts believe that online gambling will continue to grow further in Europe, Asia, Australia, and South America, and the brands owned by Entain, such as SportingBet, Ladbrokes, and Bwin, are more recognised there than BetMGM.
Apart from that, staff members in those countries are likely to be aware of the local markets and the strategies that have been successful to attract new customers, not to mention that the employees of Entain in these countries would be familiar with the political situation there. That is exactly why MGM has been hopeful that the acquisition of Entain could provide it with a larger online presence globally and at the same time help it gain some advantage to beat the competition.
MGM Rumoured to Be Preparing Another Takeover Offer for Entain Operations
All of these hopes finally resulted in the first attempt by MGM to purchase Entain in January 2021. At the time, the US gambling operator offered a little more than $11 billion to acquire the assets of the British gambling giant. However, as Casino Guardian reported, Entain immediately turned down the offer, saying that the takeover proposal was not adequate.
A few months later, a domestic market rival of MGM which is currently one of the leading sports betting and daily fantasy sports betting operators in the US – DraftKings – offered $22 billion to take over the British gambling operator.
However, there is a special clause in the partnership agreement between MGM and Entain, allowing the US gambling company to impose a veto on any partnership agreements between its British partner and another gambling operator from North America. At the time when DraftKings tabled its acquisition offer, MGM CEO Bill Hornbuckle warned that his company plans to use that veto power in case Entain takes the DraftKings’ offer into consideration, so the British gambling giant eventually decided to reject the offer, saying that the offered price was too low.
Since that offer was placed, MGM has probably realised that other gambling companies could continue threatening its position in the sector. Market analysts and sources close to the company have been claiming that the US gambling operator is once again preparing to make a move and do whatever it takes to take over Entain, or in the worst possible case scenario, to acquire the British company’s operations in North America.
It is likely that MGM now feels more confident in its own strength, skills, technology and staff to run BetMGM on its own and probably does not feel it needs the Entain resources anymore. Previously, Mr Hornbuckle has hinted that it is not in the company’s philosophy to depend on others, so it is possible that the operator makes a move and unveils another takeover offer for its British partner. For the time being, there has not been any information about the potential acquisition price but people familiar with the situation do not expect to see an offer lower than the price tabled by DraftKings in 2021.
What Happens to Non-American Assets of Entain If MGM Takeover Deal Took Place?
For now, Entain has not given any indication on whether it could seriously consider accepting a takeover offer by its American partner.
If the British gambling giant is still unwilling to accept MGM’s acquisition bid, the American gambling company is likely to make a move and offer to pay a handsome price to take over the full control of the two operators US sports betting venture, BetMG. Currently, the price of such an offer remains unknown, although, an unnamed person close to the situation reported that the price would be much larger than the one paid in 2018.
If such an acquisition offer is eventually made and Entain agrees to it, MGM is expected to do pretty much the exact same thing that Caesars Entertainment did at the time it took over William Hill. The company is expected to acquire all assets of Entain in North America or either continue to operate the non-American assets of the gambling giant on its own or simply dispose of these operations by selling them off to another company. As reported earlier, Caesars Entertainment revealed that it did not intend to keep the non-American assets of William Hill, so it eventually sold them to 888 Holdings.
Other questions linked to a possible takeover of the Northern American operations of Entain also emerged. If MGM is only interested in acquiring these assets of the British gambling giant, would DraftKings still be interested in purchasing the operations that are outside its domestic market and at what price? According to some gambling market analysts, such a takeover deal is possible, but it would not be completed at the price that was previously offered by the daily fantasy sports and sportsbook provider. On the other hand, DraftKings could get a chance to make a powerful impact in the rest of the world and come up as competition to other gambling market giants, such as Flutter Entertainment, for example.
- Author
Olivia Cole
