Ever since the U.S. Supreme Court paved the way for states to legalize sports betting in 2018, investors and companies have rushed to capitalize on the opportunity.
DraftKings (NASDAQ:DKNG), which was one of the hottest stocks last year after going public via a merger with a SPAC in April, has been inking exclusive partnerships with everyone from individual sports franchises to networks such as ESPN. DraftKings Chief Business Officer Ezra Kucharz said "regulated betting is quickly becoming a fixture of modern sports entertainment" when discussing the company's recent partnership announcement with Turner Sports.
In September, Caesars Entertainment (NASDAQ:CZR) announced it agreed to acquire British bookmaker William Hill for approximately £2.9 billion in a bid to capitalize on the U.S. betting market.
"The opportunity to combine our land based-casinos, sports betting and online gaming in the U.S. is a truly exciting prospect," Caesars Entertainment CEO Tom Reeg said.
Amid the continued interest in betting, Entain (OTC:GMVHY) has become the latest British bookmaker to become a target of a U.S. casino operator as MGM Resorts (NYSE:MGM) approached the company with an $11 billion takeover offer. Entain, which is MGM Resorts' partner in the U.S. market, said the offer "significantly undervalues the Company and its prospects."
The proposed deal represents a 22% premium to Entain's closing share price from 12/31 and would give Entain shareholders a 41.5% stake in MGM Resorts. Shares of Entain surged nearly 30% on the news to a new all-time high as MGM Resorts also reportedly offered $10 billion previously, which was declined by Entain.
"The Board has also asked MGMRI to provide additional information in respect of the strategic rationale for a combination of the two companies," Entain said in a statement. "A further announcement will be made as appropriate. In the meantime, Entain shareholders are encouraged to take no action."
Entain also said that MGM Resorts indicated a limited partial cash alternative would be made available to the company's shareholders. Under UK takeover laws, MGM Resorts now has until February 1 to make a firm offer.
Given the enthusiasm over the prospects of betting in the U.S., it won't be surprising to see MGM Resorts come back to Entain with a higher offer to expand its presence in the quickly-growing market.