A potential alliance
Gambling giant Flutter Entertainment is reportedly considering a takeover of Penn Entertainment, the company that runs ESPN Bet. Its focus is on digital assets, rather than Penn’s extensive portfolio of land-based casinos and racetracks across North America.
Regional gambling operator Boyd Gaming is eyeing up a potential acquisition opportunity for those physical assets and could team up with Flutter to get a deal over the line.
Boyd’s potential interest in submitting an offer worth at least $9bn
Reports first surfaced last month about Boyd’s potential interest in submitting an offer worth at least $9bn. Insiders close to the situation said that Penn’s management had doubts about Boyd’s ability to finance such a significant bid by itself.
Penn Entertainment shares jumped nearly 5% after rumors of a possible acquisition started circulating on Friday.
Taking out the competition
Flutter Entertainment owns and operates FanDuel, which dominates the US sports betting market alongside DraftKings. The entry of ESPN Bet in November in 17 states was cause for concern due to fears the Penn Entertainment-operated sportsbook might take a lot of business away from FanDuel.
The results to date haven’t been overly impressive, with ESPN Bet carving out only about 6% of the market. It is still not live in the country’s biggest sports betting market, planning to launch in New York at some point in 2024 after securing a license for $25m following the exit of WynnBET.
Some hurdles to navigate
Any deal won’t be straightforward due to potential regulatory concerns in various states. This is especially true in the states where Boyd and Penn both run land-based gambling facilities.
The Federal Trade Commission would also have to rubber-stamp the deal to ensure that a transaction doesn’t jeopardize competition in the sector. The sale of certain properties might be a consequence to ease these concerns.
Appetite exists among certain Penn investors over a potential sale of the company after a few years of struggles. Investor activists Donerail Group issued a public letter in May criticizing the company’s management and saying that a sale could help salvage shareholder value after the stock price dropped by more than 80% over the past three years.
