A little over a year after its first attempt to acquire British bookmaker Entain, operator MGM Resorts International ($MGM), a staple in the US online casino industry, might be ready to try again.
According to Citi analyst Monique Pollard, several factors have influenced MGM’s continued pursuit of Entain, one being the European operators slumping share price. MGM and Entain are 50/50 partners in the sports betting and online casino platform BetMGM with the former expressing interest in owning complete control of the application.
BetMGM keeping everything in house
BetMGM is one of the leading online operators in the US. Thus, it makes perfect sense for MGM to want complete control of that critical asset. With the acquisition of Entain, MGM would add yet another revenue stream while limiting its dependence on land-based casinos.
Additionally, Entain comes with several recognizable brands like Ladbrokes, Coral, and Partypoker. Should MGM add these titles to its BetMGM Casino portfolio, it would easily make the company an online gambling powerhouse.
Entain CFO Rob Wood knows the value of the IP, saying BetMGM is on pace for over $1 billion in revenue this year.
“Customer engagement remains as strong as ever, and on a same state basis, BetMGM continues to deliver growth of over 30%. In Ontario, it’s still relatively early days. But despite it being highly competitive, in June, BetMGM saw over 80 million transactions in the month.”
“With BetMGM continuing to deliver, we remain on track with our ambition of over $1.3 billion of net gaming revenue this year, and reaching positive EBITDA during 2023.”
Could this deal really happen?
In 2021, MGM offered a massive $11.06 billion to acquire Entain. That equaled a 22% premium to the share price at the end of 2020.
“Like other gaming equities, Entain is faltering this year,” Pollard said.
“But MGM would still need to offer a sizable premium if it makes another offer.”
Pollard continued by saying MGM would need to offer a premium of at least 50% over the company’s current share price.
Speaking with PlayUSA last year, SpringOwl Asset Management CEO Jason Ader said,
“You never put your best our first — so I think there’s room to move up.”
“There’s been some reports that nobody else could buy Entain because MGM has a relationship. I’m not convinced that’s the case, but I do believe that MGM has an advantage as a result of that.”
However, other power gaming operators have expressed interest in acquiring Entain. In September, DraftKings ($DKNG) offered $20 billion in cash and equity for Entain. However, no deal ever came to fruition.
Although MGM has yet to make a new offer for Entain, other companies are still expressing interest.