Rumor has it that MGM Resorts International (NYSE: MGM) is considering gaining full control of the BetMGM enterprise. The casino operator is unlikely to make an acquisition offer for its partner business, Entain Plc (OTC: GMVHY).
MGM’s plan for BetMGM emerged after DraftKings (NASDAQ: DKNG) revealed it was negotiating a takeover of Entain, thus putting it in an awkward position.
Discussions are believed to have advanced to the level DraftKings offered $22.4 billion cash and stock. Entain had earlier rejected a $20.5 billion cash and equity offer DraftKings had floated, and DraftKings made the second pitch.
The acquisition rumors only increased MGM’s long-held desires of fully controlling BetMGM. Rumor has it that Entain acquisition will give MGM Resorts leverage to gain control of BetMGM without spending a lot of cash.
MGM has a variety of options at its disposal regarding how to gain control of BetMGM. According to a Bloomberg article, MGM could seek control of the gaming unit through a push for a spinoff.
Spinning off iGaming and sports wagering branches is a common way gaming companies use to maximize shareholder value. For instance, Flutter Entertainment (OTC: PDYPY) is set to spin off FanDuel coming year. Wynn Interactive is also being ejected out of Wynn Resorts later this year.
If MGM manages to bring BetMGM to public trading, it can smoothen things with Entain and DraftKings by sorting the technology both companies provide.
BetMGM is structured in a manner, MGM takes care of all branding and marketing while Entain roles are behind the scenes infrastructure.