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Gambling group DraftKings bids $22.5 bn for Entain

·3-min read
UK gambling giant Entain rejected an earlier offer from DraftKings which upped the ante (AFP/SCOTT OLSON)

UK gambling giant Entain on Wednesday said it had received a takeover bid from US rival DraftKings worth $22.5 billion as online sports betting surges on both sides of the Atlantic.

Entain said the offer came after it had rejected a lower figure from DraftKings, as the gambling sector looks to consolidate.

"The board of Entain will carefully consider the proposal and a further announcement will be made as and when appropriate," the statement added.

The UK firm had previously revealed the cash and shares offer but did not disclose the price at the time.

Entain's statement said DraftKings' improved offer was priced at £28 per share, giving a value of £16.5 billion ($22.5 billion, 19.2 billion euros).

The rejected offer had been priced at £25 per share and comes after Entain in January snubbed a takeover approach from US casino giant MGM worth £8.0 billion.

Laura Hoy, equity analyst at Hargreaves Lansdown, said that even if the DraftKings bid was accepted, "usual regulatory scrutiny could be further complicated by antitrust concerns due to BetMGM, Entain's joint venture with US Casino operator MGM".

Entain owns Britain's betting-shop chains Ladbrokes and Coral, as well as various online gambling websites focused on football and horse racing bets.

DraftKings specialises in fantasy leagues betting, notably across the major US sports of American football, basketball, baseball and ice hockey.

Entain's share price soared 18 percent late Tuesday on news of the fresh takeover approach that was made shortly before the close of London trading.

It rallied a further eight percent at the open Wednesday to sit at £24.43.

London's benchmark FTSE 100 index, on which Entain is listed, climbed one percent overall.

- Sector consolidation -

The takeover announcement comes after gambling group 888 earlier in the month agreed to buy the non-US operations of rival William Hill in a deal aimed at creating a leading online betting group.

US group Caesars Entertainment agreed to the sale in a deal worth £2.2 billion.

Caesars had bought all of William Hill, which has more than 1,400 betting shops in the UK, for around £3.0 billion last year but said at the time that it was interested in holding onto only the US part of the business.

US gambling is taking off after the country's Supreme Court in 2018 lifted a ban on sports betting in the United States.

The ban had covered almost the entire country for 25 years, with the notable exception of Las Vegas.

While the US has lifted restrictions, officials in the world's biggest gambling city Macau have unveiled plans for a crackdown on the industry.

Macau's government has proposed direct supervision over the gambling sector, slashing the value of big operators.

The move comes as the government in mainland China embarks on a crackdown on a wide range of industries -- including tech and private education firms -- as it looks to tighten its grip on the world's number two economy.

bcp/rfj/lth

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