What DraftKings $22.4 Billion Bid for Entain Means for Future of Sports Betting

What DraftKings $22.4 Billion Bid for Entain Means for Future of Sports Betting

DraftKings, an online sportsbook that made its name in daily fantasy sports, has reportedly put in a $22.4 billion bid for Entain, a sports gaming company located in the United Kingdom. While the transaction has puzzled some, the mere attempt by DraftKings says a great deal about how online sportsbooks will try to operate moving forward.

As top online sportsbooks continue to try expanding their footprint in the United States, the betting provider DraftKings is attempting to push through a bit of international business that could impact the sports gambling industry on both a permanent and global level. The move: A $22.4 billion bid for the United Kingdom gaming company, Entain.

Don't worry; you're not misreading anything. That's "billion" with a "b." And if you're wondering why they would pony up so much for another company, you're not alone. Everyone wants to know what DraftKings is thinking. And for our part, we want to know what DraftKings' $22.4 billion bid for Entain means for the the future of sports betting in general.

Impact of DraftKings' Interest in Entain

At first glance, DraftKings' interest in Entain seems out of left field—and off-brand. They are an online sportsbooks. Why are they trying to branch out to a gaming company that specializes in physical locations?

The answer lies in the question itself. DraftKings wants to establish itself as an on-site sports betting provider in addition to all the business they do online. 

This may not be the natural next move, but it is, in fact, their next front tier if they want to broaden their influence.

Why Online Sportsbooks May Want On-Site Locations

For years, the focus for online sportsbooks has primarily lied with getting up and running in the U.S. at all. But as more and more states green light legalize sports gambling, it opens the door for them to turn their attentions elsewhere. Even longtime holdouts like Connecticut and Maryland are set to join the fold. Soon enough, legalized sports betting will be the standard in nearly every, if not actually every state.

That obviously creates a window of opportunity for all sportsbooks. It also, however, increases the level of competition. DraftKings are not alone in their operations. They have to contend with other huge gaming companies. And the more common legalized sports gambling becomes, the more options will be at the disposal of potential customers.

Separating yourself from the field becomes paramount in that instance. And as of right now, scant few online sportsbooks are looking to erect a bunch of physical locations. Sure, places like DraftKings and Fan Duel have pop-up cashiers with preexisting structures like sports arenas, but they'ren not pumping out these larger-scale, standalone operations that serve as the only reason foot traffic comes through the door.

Branching out with more physical locations would, by extension, give DraftKings a leg up over other competitors. And taking control of a company as large as Entain is considered a valiant first attempt at gaining that on-site influence on an international scale.

The Other Challenge for Online Sportsbooks

DraftKings' attempt here is also a nod to the overall limitations of online sportsbooks.

Internet operations have a much larger reach than those of physical locations at this point. That being said, there are some regions in the United States and elsewhere in which only on-site betting is allowed. The local governments in these places have effectively decided that in order to ensure residents aren't using sportsbooks outside their region, they must submit their wagers within actual state lines, at physical sportsbooks, for the wager to be considered legal.

The credibility of this view is debatable. It doesn't much make sense. People are already using international sportsbooks or betting providers outside their current state lines. Forcing them to visit on-site locations only ensures that keeps up.

At the same time, there is still a market for those on-site services. And if betting providers like DraftKings hope to gain licenses in certain territories, they need to start building up their physical presence.

Will DraftKings' Big Be Successful?

Experts originally didn't fully grasp the aggressiveness of DraftKings' offer. Paying $22.4 billion for Entain is seen as extreme. Dig deeper, though, and you can see their endgame.

Entain has a partnership with Bet MGM International, a gambling powerhouse that has casinos all throughout the United States. Most believe MGM will try to block this sale, as it would allow DraftKings to cut ties with their partnership in favor of constructing their own on-site operations.

The other part to all this: MGM alredy tried to buy out Entain themselves. They offered $11 billion months ago—an offer Entain rebuffed. DraftKings is clearly trying to come over the top in hopes of persuading Entain to not only accept their offer, but help figure out how to get around MGM's potential opposition of the sale.

Is $22.4 billion enough money to put all the wheels in motion? It's viewed as a no-brainer for Entain. But MGM remains the wild card.

What Happens if DraftKings is Successful

A lot is going to change throughout the global sports betting industry if DraftKings is successful in its takeover attempt of Entain.

For starters, you will expect to see DraftKings operate in more places around the world, both online and in physical locations. You should also expect them to more aggressively chase licenses in regions throughout which they don't already have them.

The larger ramification, though? 

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