The gambling giant is expected to announce its figures for the first six months of 2021. The results could totally change the game for the company, which walked away from an $11 billion deal from its US partner, MGM, earlier this year. But how will it affect the US market?
Who is Entain?
Entain, the UK-based gambling company that owns world-renowned casino brands like Ladbrokes, Coral, Bwin, and PartyPoker, is expected to announce its official figures for the first six months of the year this week.
The news comes as the company registered a 150% growth in its shares over the past month, making Entain’s shares worth approximately 40% more than MGM’s – its US partner. This could be particularly significant to the US market.
Since 2018, Entain and MGM have jointly run BetMGM LLC, one of the leading sports betting and iGaming operators in the US. Yet earlier this year, in a bid to consolidate its hold on the US gambling market and compete more aggressively against rivals, MGM tabled an $11 billion deal to acquire all of Entain’s shares. Negotiations fell through due to what insiders said was a ‘wide divergence in valuation expectations.
Fall & Rise in Company Value
The news that Entain had walked away from the deal led to the Ladbrokes and Coral owner’s shares to fall by 12.5%, reducing the company’s overall value. But the new figures – especially riding on the incredible 150% growth from the previous month, and a 42% leap in gaming revenues over the second quarter of the year – could see the company’s value increase. This may make MGM consider forking out more than it was willing to last January, particularly as MGM is in a stronger position than before after it sold its Vdara and Aria resorts for $4.4 billion to the private equity giant, Blackstone.
Why is this important?
Such a takeover could totally change the landscape of US online casinos. Indeed, as more states open up to the idea of online sports betting and iGaming for their citizens, operators in the US are channeling billions to attract new clients and take on well-known gambling brands.
Over recent months, the $27.16-billion, UK-based gambling group Flutter, which owns the PaddyPower and SkyBet brands, among others, invested $4.2 billion to increase its stake in FanDuel, the US-based daily fantasy sports provider. Meanwhile, US-based gambling groups, Caesars and Bally’s acquired legendary gambling companies William Hill and Gamesys for $2.9 billion and $2 billion, respectively.
Entain’s new, favorable numbers, therefore, could see the $450 million, 50/50 joint venture that is BetMGM LLC become wholly-owned by MGM. This could lead the company to expand its reach and increase the number of services it offers, in a bid not to become eclipsed by all the other companies that have a stake in the US gambling market.
What can we expect?
Yet whether that will happen remains to be seen. Entain has been very vocal and clear about where it wants to head, saying that it had a strategy for growth and sustainability, and adding that it was looking forward to continuing working with MGM on their joint US venture.
Meanwhile, people close to MGM have said that the company doesn’t want to rush into a new deal – and, in fact, according to the UK’s takeover code, there needs to be a minimum of six months before a company can be approached for a takeover once a bid has been rejected.
Even so, it is all very exciting for both sides of the pond, and we can’t wait to see how it all pans out once Entain’s figures for the first six months of 2021 are out.
References:
The Independent, 2021
Reuters, 2021
Financial Times, 2021
