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What happened
Online gaming shares DraftKings (NASDAQ: DKNG) fell 8.2% in trade on Tuesday after allegedly making an offer to acquire a global competitor To keep (LSE: ENT). Entain shares jumped more than 20% on the report, but investors didn’t like DraftKings’ move as much.
So what
CNBC reported this morning that DraftKings is offering around $ 20 billion to Entain, which has a 50/50 partnership with MGM Resorts (NYSE: MGM) in the United States called BetMGM. Entain and MGM had talks about an acquisition earlier this year, but these were reportedly pushed back by Entain.
Image source: Getty Images.
The offer is huge given that Entain is a major player in the European gambling market and DraftKings is a leader in the United States. operations. MGM has already stated that it will engage with Entain and DraftKings if necessary.
Now what
The jockey continues in the world of online gambling. The combination of DraftKings and Entain could create a global juggernaut, but question marks arise for US operations. MGM does not appear likely to cede its US operations to DraftKings and may not agree to a deal at all. It is also possible that MGM will acquire the US portion of Entain’s business and DraftKings will add Entain to enter more international markets. Since these are only early reports, we don’t know what management has in mind, but it’s clear investors aren’t happy that DraftKings is taking such a big step today.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.
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