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To: Glenn Petersen who wrote (228)9/21/2021 11:32:36 AM
From: Glenn Petersen  Read Replies (1) | Respond to of 240
 
More analysis:

WHAT WE KNOW ABOUT DRAFTKINGS’ REPORTED $20 BILLION BID FOR ENTAIN

Posted on September 21, 2021
by Brad Allen
Legal Sports Report

This is a developing story and will be updated.

DraftKings has proposed a $20 billion takeover of Entain, the UK company confirmed Tuesday.

The bid was first reported by CNBC’s David Faber.

Entain said it had indeed received a “proposal” from DraftKings, to acquire it for cash and stock.

However it said there was “no certainty” a formal offer would be made.

“A further announcement will be made as and when appropriate,” Entain said in a statement. “Shareholders are urged to take no action at this time.”

What we know so far about DraftKings bid for EntainThe “roughly $20 billion” price tag marked around a 30% premium to Entain’s share price as of Tuesday morning.

The price also represented a circa 18x multiple on Entain’s trailing 12-month EBITDA.

What’s in it for DraftKings?

As Faber noted, it makes sense for DraftKings to acquire aggressively with its stock so richly valued.

It could also potentially benefit from valuation arbitrage. That is, Entain’s revenues might command a higher multiple on the US stock market than in the UK.

Online gambling expertise

DK also gains access to the online gambling expertise embedded in the Entain business.

That experience is arguably one of the key edges BetMGM and FanDuel currently have over DraftKings.


Entain, while known for sporting brands like Ladbrokes and Coral, is now more of an online casino leader, according to Eilers & Krejcik analyst Alun Bowden.

DraftKings could certainly use more of that expertise in-house, even after acquiring Golden Nugget Online Gaming.

What happens to BetMGM?

Entain owns half of BetMGM, alongside MGM. It also provides the online betting and gaming technology to the joint venture.

Would MGM allow a key rival to own half of its US sports betting business. Or could it buy out BetMGM?

That might make sense if DraftKings is simply after the Entain revenues and talent rather than the technology. DraftKings already own proprietary sports betting tech.

In that case, DraftKings could take a leaf out of the Caesars/William Hill playbook and sell off some assets it does not want. Entain is a sprawling operation with gambling licenses in 27 countries, and 24,000 staff across five continents.

Defensive acquisition?

Eilers & Krejcik analyst Chris Grove suggested DraftKings was making a defensive play.

“[This] feels like a blocker bet,” Grove wrote. “Tons of value destruction if you’re DK. But you probably get a nice rebate selling the JV interest back to MGM. Regardless of what anything thinks, you have to admire the sheer audacity and the fact that DK is in the position to make this offer at all.”

Recall, MGM tried to buy Entain earlier this year for around $11 billion, but Entain said that bid “dramatically undervalued” it.

It has been proven spectacularly correct.

How the market reacted

Entain’s share price was last up 16.6% to 2,240p. That’s a fraction below the reported 2,500p offer price.

DraftKings stock was down 4% to $54.64.

Representatives from DraftKings had not returned requests for comment at time of writing.

What We Know About DraftKings' Reported $20 Billion Bid For Entain (legalsportsreport.com)



To: Glenn Petersen who wrote (228)10/13/2021 4:21:36 AM
From: Glenn Petersen  Read Replies (1) | Respond to of 240
 
DOES BETMGM GROWTH CHANGE CALCULUS FOR ENTAIN DEAL WITH DRAFTKINGS?

Posted on October 12, 2021
by Brad Allen
Legal Sports Report

BetMGM is at the center of the three-way M&A tussle between DraftKings, Entain and MGM Resorts.

While that situation is being untangled, the joint venture keeps on proving its worth.

BetMGM delivered Q3 revenues of more than $200 million, according to Entain’s Q3 results. That was good for a? 26% share of markets where BetMGM is live, up from 24% in Q2.

For comparison, DraftKings expects to generate around $230 million in total Q3 revenues.

BetMGM a top contender?

Entain’s CEO sees evidence of BetMGM approaching top status.

“Just looking at the month of August in isolation, we can see that BetMGM is now number one in the markets in which we operate,” said Entain CEO Jette Nygaard-Andersen.

“And we can see we are clearly starting to challenge for the number one market position nationwide.”

Igaming powered BetMGM growth

It’s important to note BetMGM’s total share is boosted by online casino. It is the largest igaming operator across the US with a 32% share.

That edge is especially inflated in Q3 thanks to the relative lack of sports. BetMGM is still third in sports betting revenues per state-by-state data.

Michigan is perhaps reflective of the overall picture. BetMGM had a 40% share of online gaming revenues, and a 23% share of online sports betting handle in August.

That was third behind DraftKings and FanDuel. BetMGM was also heavy on marketing spend.

Other notes from Entain call

-- Arizona sports betting is already BetMGM’s largest state in term of active players. That is likely buoyed by citizens from other states crossing the border to bet.

-- The initial bonusing frenzy around the start of the NFL season has calmed down. “We see the promotional environment normalizing,” Nygaard-Andersen said. “And as we always say, the best products will be the winners.

-- ”She said lifetime player values were still “looking good.”

-- No news on DraftKings bid

-- The CEO also refused to take any questions on DraftKings’ $22 billion bid for Entain.

“As flagged, we are now carefully considering the proposal,” Nygaard-Andersen said. “That includes a number of matters, including structure and value and then we’ll come back to the market as and when appropriate.”

A key part of those negotiations will be the fate of BetMGM. MGM has said it wants full control of the JV and can kill the takeover if it doesn’t get it.

Analysts at Regulus Partners said Entain might be wise to sell its share to MGM now while business is booming and the relationship is “amicable.”

Shore Capital pegged BetMGM at around an $11 billion valuation.

Does BetMGM Growth Change Calculus For Entain Deal With DraftKings? (legalsportsreport.com)