MGM Resorts International’s CEO Bill Hornbuckle revealed that the company will seek to receive the majority control of BetMGM, an online gambling joint venture with its British partner Entain in case the Isle of Man-based gambling group says yes to a $22.4-billion buyout offer made by the US sports betting and daily fantasy sports operator.
Currency, BetMGM is being operated as a joint venture with equal shares between the two gambling giants, with the business representing a major strategic asset for both businesses, as they are both trying to get a bigger chunk of the flourishing US online sports betting sector.
Recently, BetMGM has managed to surpass one of its main competitors, DraftKings, and became the second-biggest online sports betting app by revenue share in the US. However, DraftKings is on a mission of acquiring Entain, whose technology is considered one of the best in the industry. In order to make this possible, DraftKings has offered a price that is bigger than its own overall market value. Also, DraftKings’ takeover offer for the British gambling operator has followed a previous attempt by MGM Resorts to acquire the company for $11 billion, a bid that was rejected by Entain.
For the time being, the British gambling company has not revealed whether its Board of Directors will make a recommendation to shareholders to accept the buyout offer of DraftKings. Under the UK acquisition laws, the US sports betting and daily fantasy sports operator has until October 19th to make its takeover bid formal or abandon the deal. Only to make things even more complicated, MGM Resorts has shared that, under the provisions of its joint venture agreement with Entain, it has a veto power to block any potential deal between Entain and another company, at least in North America.
Will BetMGM Become the Apple of Discord in the US Online Betting Market?
Both retail and online sports betting have been on the rise since the US Supreme Court decided to give the green light to the new form of gambling, making it legal on the territory of the country. BetMGM, on the other hand, has managed to become a key player in the sports betting sector ever since, with the joint venture enjoying rising popularity and a great online presence.
Although many questions regarding the fate of the bidding process for Entain and BetMGM remain unanswered, some analysts have speculated that rather than try to make a bigger takeover offer by DraftKings, MGM Resorts will use its veto powers to block the deal as an advantage to secure the majority control of its joint venture with Entain on one hand, and to access Entain’s technology, on the other hand.
At the time he presented his speech at the Global Gaming Expo earlier this week, the CEO of MGM Resorts International shared that no details regarding a three-way arrangement between Entain, MGM, and DraftKings has not been made yet. Reportedly, one of the possible options might involve BetMGM licensing the technology of Entain from DraftKings. However, Mr. Hornbuckle explained that such a move was not considered a good solution in the longer term as the US gambling giant will be left without ownership of major systems that run the online betting application.
MGM Resorts’ boss believes there are a lot of possibilities for such an agreement to be structured. He, however, made it clear that MGM is willing to develop or acquire the experience and technology to operate its own online gambling service in the years to come.