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With DraftKings and Entain still in talks regarding a potential takeover bid by the U.S. sportsbook powerhouse, the CEO of Entain partner MGM Resorts has weighed in and pointed out a key roadblock for the two sides.
During a panel discussion Wednesday at the Global Gaming Expo (G2E) in Las Vegas, MGM CEO Bill Hornbuckle said that the company can block DraftKings from operating both its own platform and controlling the 50 percent of the BetMGM joint venture that Entain owns, should it proceed with an acquisition without MGM’s sign-off.
“This is really up to what DraftKings and Entain want to do, with one key caveat,” Hornbuckle said. “Whether that happens or not, I’m not going to speculate, it’s complicated, it’s contingent on a lot of DraftKings stock and so a value equation has to be made there.
“The one thing I can tell you for sure is that we have a great partnership with Entain,” he added. “We’ve gone from 8 percent to 25 percent market share in total which, in 18 months, we’re proud of.
“All of that being said, it’s not a cheap date. We’re entrenched in their technology and so we would love to own more of BetMGM.”
Hornbuckle said that if DraftKings does ultimately agree to purchase Entain, the terms of the joint venture would prohibit the company from operating another U.S. brand, which would include the DraftKings brand itself.
“Something has to go,” he said.
Still, Hornbuckle said MGM would be a willing participant in talks to reach a solution.
“We have that opportunity then to step in and say in order to make that happen, and we would listen, this is what we want and what we would want to do,” he said. “Obviously we have ideas, I’m not going to share them with a room of 200 people.”
Hornbuckle appeared on a panel with Wynn Resorts CEO Matt Maddox and Seminole Gaming CEO Jim Allen to discuss a variety of topics, including the industry’s recovery from the coronavirus pandemic and the chase for market share in the sports betting and online gaming space.
Wynn Resorts has mounted its strongest marketing effort to date in recent months to boost its WynnBET platform.
“Is there a bubble in customer acquisition? Yes. Is losing a billion dollars a year a good business model? No, but that’s what the big guys are doing,” Maddox said, followed by Hornbuckle, seated next to him, joking that the billion-dollar figure was a bit high.
“It’s expensive, I’ll grant you that,” Hornbuckle said with a laugh, before Maddox continued.
“But the market is so large and there will be an inflection point and a few of the companies are going to do really well,” Maddox said.
“The way we’re approaching it, we’re thinking about it on a state-by-state basis and taking a little more cautious approach looking at states where we think we can have an impact, where it’s not too saturated.
“Arizona’s a great example, states that just opened and you’re not totally behind, that’s where we’re spending a lot of money, and states that are pretty saturated and the competition’s really good, like New Jersey where we’re just not wasting dollars, because that’s what we would be doing.”
For Allen, the Seminole Tribe and its Hard Rock gaming empire is preparing to launch its own sports-betting offering in Florida, pending the outcome of several lawsuits looking to block the launch.
“We’re fortunate, because we knew if we won the political battle in Florida, we had the chance for that to be our foundation block,” Allen said. “With only two tribes in the state, you now have the ability to reduce the cost of acquisition of a guest.
“Certainly, we could lose in court, and then we’re going to revisit the philosophy, but then we have the referendum route we can go.”
Allen agreed that the big-spending model was not a good fit for his company and pointed out that any successful sports-betting strategy should also ultimately include online casino.
“In New Jersey, we understand we could be on TV losing $300m a quarter to gain market share, but that business does not work long term,” he said.
“Taking a land-based database with the right online philosophy, not just in sports betting, if you’re only in the sports-betting business and you’re not lobbying the political side of this to get the iGaming side eventually legalized, then that’s where there could be a bit of a flaw.”
