Bets during Baseball Season 

Sportsbook Giant DraftKings Ends Negotiations with Entain

Entain which was formerly known as GVC Holdings owns Bwin, Partypoker, Coral, Ladbrokes, and many other companies in the gaming and casino industry. MGM Resorts made an $11 billion dollar offer to takeover Entain, but the offer was considered to be too low because the company believes it had a higher evaluation. On the other hand, DraftKings initially offered 22.4 billion, but now the company has no intentions to acquire Entain.

DraftKings Abandons Bid for Entain

DraftKings, which is based in the United States, abandons $22.4 Billion Bid For Entain to buy a British competitor following negotiations with Entain’s leadership. DraftKings made a better offer of 2,800 pence a share in cash and stock for Entain.

In the negotiation process, Entain had asked the regulatory body that oversees how mergers take place in the United Kingdom to extend the deadline from October 19 to November 16 in an effort to allow DraftKings to firm up the final offer.

The first offer was only 2,500 pence and the agreement portrayed a 43 percent premium for the stock price but the deal doesn’t look like it will come to fruition.

The reason the deal fell through was very complicated as DraftKings refused to meet Entain’s demands. First and foremost the deal was difficult to push as Entain affiliates with another rival BetMGM. The underlying detail was if BetMGM would have had to hand over the keys to a key rival. For this deal to happen quickly, DraftKings would have been required to get consent from BetMGM.

Joseph Greff who is an analyst at J.P. Morgan was surprised when the fallout of a potential deal took place. He stated, “What remains unanswered to us, at least, is why [DraftKings] launched this in the first place knowing the complications associated with closing a deal.” DraftKings has boasted about its continual growth in the United States and Canada by extending numerous partnerships in the sports betting industry.

This potential deal with Entain may have been a defensive method as Entain has escalated its brand in the online gaming community. DraftKings may have been on the defensive as Entain has a lot of technological advancements within the iGaming industry. The esports market is growing at a rapid rate as many competitors are joining the market.

How Did the Stock Market React to the News

DraftKings’ (DKNG) stock price reacted well as the news dropped. DraftKings’ stock price soared 4.12 percent during normal trading hours and fell just 0.18 percent in after trading hours. On the other hand, MGM Resorts’ (MGM) price fell 1.89 percent during the day and only gained 0.02 percent in the evening. Entain (ENT) dropped 6.32 percent in the international market.

However, in the quarterly earnings report, BetMGM has shown strong growth. The market share for the company has a 23 percent hold across the sports betting and iGaming industry in the third quarter of 2021. The market share is approximately 26 percent in the locations BetMGM operates.

MGM believes that having control of the BetMGM joint venture is a strategic move going forward. DraftKings essentially walking away from a lucrative agreement may open the door for a re-negotiation. Before the initial deal with DraftKings, Entain rejected an $11 billion offer as officials believed figures that were presented were undervaluing the company’s evaluation and potential.

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