DraftKings is one of Canada's biggest fantasy sports betting operators and has recently been at the center of media attention for attempting to acquire Entain, a successful gambling group from the UK with a string of respected online casinos and sportsbooks.
Negotiations that seemed to have ended without compromise on either side have resulted in Entain agreeing to extend its hard deadline for DraftKings to make an offer. Although discussions were ongoing, DraftKings previously pulled out without any formal offer made, possibly due to differences in the perceived value of Entain. But the acquisition may still be completed in the future. To understand this deal in its entirety, you first need to understand what came before.
This particular acquisition is attractive because it would allow DraftKings to leverage Entain's expertise and technologies, including their growing and regulated online Canadian casino. But the deal is also controversial for reasons that are outlined below.
Competitor Attempts to Buy Entain
MGM is a key competitor to DraftKings in the North American gaming market. And it just so happens that MGM attempted to acquire Entain earlier this year with all three reported bids rejected due to a shortfall between perceived evaluations. It is rumored that MGM’s attempts to buy Entain is what ignited interest and motivation in DraftKings to make its own inquiries.
However, Entain and MGM are not entirely separated. They are already working together on a new US Sportsbook. This is off the back of the federal legalization of some sports betting in the country. This significant shift in US sports gambling laws, which allows states to make the final decision, has created a flurry of activity, jostling for positions and rumors of potential partnerships.
By utilizing the advanced technologies already developed by Entain throughout its successful overseas sports betting bookmakers, MGM and Entain can together dominate some of the emerging US sports betting market. The new sportsbook, namely BetMGM, is growing and has already become an affiliated partner with the NFL.
Canada legalizes sports betting
Just how the US has legalized some sports betting by handing jurisdiction to individual states, the same has now happened in Canada. Single-event sports betting markets have recently been made legal in Canada to prevent the use of illegal casinos. Criminal gangs often run these entities, and it would create the opportunity to recover taxes and regulate these services existing in this unlicensed space.
Canadian company DraftKings could partner with Entain to become one of the biggest forces in this emerging market, especially considering Entain’s strong growth and proven technologies in sports betting.
One complication of the deal is that by acquiring Entain, they would also be getting into bed with one of their biggest competitors by owning part of BetMGM. It’s thought that if the deal was to go ahead, MGM would try to buy DraftKings out of the BetMGM project.