MGM wants full control of BetMGM if partner Entain sells to DraftKings, CEO says

BetMGM is currently operated as a 50-50 joint venture between MGM and Entain, which is based in London. It represents a key strategic pillar for both companies as they seek to grab top marketshare in the booming U.S. online betting market.

BetMGM has recently surpassed DraftKings to become the second largest U.S. online betting app by revenue share. But DraftKings is now seeking to buy all of Entain, whose technology is seen as industry-leading.

DraftKings is offering a price that is more than its own entire market value. The bid follows an earlier attempt by MGM to buy all of Entain for $11 billion that Entain rejected. (For more on Entain, BetMGM, and why the British company has become such a sought-after prize for U.S. gambling companies, check out this Fortune feature story.)

Entain has not yet said whether its board will recommend that shareholders accept DraftKings offer. Under U.K. takeover laws, DraftKings has until October 19 to formalize its takeover bid or walk away from a deal. Complicating matters, MGM has said that its joint venture agreement with Entain gives it the right to veto any tie-up between Entain and another company, at least in the North American market.

Analysts had speculated that rather than try to trump DraftKings’ offer, MGM will use the threat of vetoing the deal as leverage for securing majority control of BetMGM and access to Entain’s technology. Hornbuckle seemed to confirm this is what he is thinking in an interview with Bloomberg News on Tuesday.

“We’d have to come to some resolve,” Hornbuckle told Bloomberg. “We have 50% now. I would like more. I would need more.”

Then in a speech Wednesday at the Global Gaming Expo, a gambling industry conference in Las Vegas, Hornbuckle said that terms of a three-way arrangement between MGM, Entain, and DraftKings, had not yet been hammered out. One option might involve BetMGM licensing Entain’s technology from DraftKings, although Hornbuckle also said that licensing was not a good long-term solution as it would leave MGM without ownership of the key systems that run the online betting app, including odds-making and player account management software.

“There’s a lot of ways to structure it,” Hornbuckle said. “The only thing that would be successful for us is if we got control of it and had a technology that we could proceed with.”

He said that ultimately MGM wanted to develop or acquire the skills and technology to run its own online gambling operation.

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