BetMGM Partnership Unlikely to Be Permanent, Says Entain CEO

Posted on: October 10, 2023, 05:34h. 

Last updated on: October 10, 2023, 05:34h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Since inception, BetMGM has been a 50/50 joint venture between MGM Resorts International (NYSE: MGM) and Entain Plc (OTC: GMVHY). That will remain the case for the foreseeable future, but a time could come when the partnership dissolves.

Entain CEO Jette Nygaard-Andersen
Entain CEO Jette Nygaard-Andersen. She told an audience at the Global Gaming Expo (G2E) today that the BetMGM joint venture won’t last forever. (Image: The Australian)

Entain CEO Jette Nygaard-Andersen made comments to that effect earlier Tuesday during the opening keynote address at the Global Gaming Expo (G2E) in Las Vegas. Interestingly, she was joined on the panel by MGM CEO Bill Hornbuckle. Churchill Downs (NASDAQ: CHDN) CEO William Carstanjen was also part of the discussion, which was moderated by CNBC’s Contessa Brewer.

The 50/50 structure of BetMGM is likely to continue over the near-term, but Nygaard-Andersen told the audience there will come a time when the iGaming and online sportsbook operator will have a different ownership structure.

Joint ventures don’t last forever,” said the Entain boss.

She didn’t elaborate on a timeline for the joint venture being altered or what form alterations or dissolution could take.

Interesting Timing by Entain CEO

Alone, Nygaard-Andersen making such remarks in the presence of Hornbuckle is arguably interesting. After all, the MGM chief executive officer has made no secret of his company’s desire to eventually control all of BetMGM.

The intrigue behind Nygaard-Andersen’s comments is potentially heightened because her commentary arrived less than three weeks after Entain issued a tepid third-quarter financial forecast. That stoked speculation within the investment community that recent missteps by the Ladbrokes owner could prompt MGM to smell blood and potentially make another takeover offer for its BetMGM partner.

In early 2021, Entain rebuffed a $11.06 billion takeover proposal from MGM, dismissing it as inadequate. For his part, Hornbuckle has been steadfast in telling analyst and investors that his company won’t again bid for Entain.

As of the close of US markets today, Entain has a market capitalization of $7.21 billion, perhaps signaling that any prospective suitor could get the Coral owner to the bargaining table with an offer well below $11.06 billion.

Other MGM Odds and Ends

On the G2E panel, Hornbuckle noted “it’s not lost on us” that FanDuel and DraftKings (NASDAQ: DKNG) are out to a significant lead on the field, including BetMGM, in the US sports betting space. The MGM boss added that BetMGM could soon rollout a single wallet solution that would allow for BetMGM clients to seamlessly use the app in the various states in which it’s operational.

Separately, Hornbuckle told the audience that ransomware attack suffered by MGM last month is behind the operator. He reiterated that the company didn’t pay the ransom and that insurance will cover the $100 million reduction in third-quarter earnings incurred by the casino giant.

He also told attendees that he’s optimistic a labor strike in Las Vegas will be averted and that MGM intends to replant trees in front of the Bellagio that were recently chopped down in advance of next month’s Las Vegas Grand Prix.