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DraftKings Stock Slides On $20 Billion Takeover Bid For U.K.-Based Entain

CNBC reported Tuesday that DraftKings has made a 'mostly stock' bid for Entain that would value the British sports betting group at around $20 billion.

DraftKings  (DKNG) - Get DraftKings Inc. (DKNG) Report shares slumped lower Tuesday following a report that the U.S.-based online gaming group is planning a $20 billion takeover bid for Britain's Entain Plc.

CNBC's David Faber said DraftKings wants to make its play for Entain mostly in stock, leveraging its year-to-gain of around 28% and its market value of around $23 billion. Faber said an informal bid of 2500 pence per share for the U.K.-based bookmaker was made earlier this week. 

"The Board of Entain confirms that it has received a proposal from DraftKings to acquire Entain, the consideration for which would include a combination of DraftKings stock and cash," Entain said in a statement to the London Stock Exchange. "There can be no certainty that any offer will be made for the Company, nor as to the terms on which any such offer may be made."

"A further announcement will be made as and when appropriate," the statement added. "Shareholders are urged to take no action at this time."

Entain's London-listed shares were marked 15.1% higher at 2205 pence each in late-afternoon trading in Britain, while DraftKings was marked 5.33% lower in active early dealing at $53.96 each.

The move could see DraftKings challenge U.K. betting stalwart 888, which agreed to buy the non-U.S. assets of bookmaker William Hill from Caesars Entertainment CZR for around $3 billion.

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William Hill, a familiar figure in British culture owing to its sports betting dominance in that market, has been operating U.S. sports books since 2012 and has operations in 13 states. It also has an existing 20% partnership with Caesars. 

Last month, DraftKings reported a narrower-than-expected second-quarter loss and boosted its full-year profit guidance amid a rebound in online sports betting and interest in NFTs and other media that continues to draw users to its online platform.

DraftKings' July quarter revenues rose 320% from last year to $298 million, well ahead of Street forecasts, as monthly unique payers (MUPs) on its platform increased 281% to 1.1 million.

Gambling Tax: How Much You Will Pay For Winning?

Sports betting stocks, and the sector in general, have been on a steady rise since the U.S. Supreme Court struck down a decades old law that prohibited New Jersey from allowing sports wagers to be placed at state casinos.

The ruling allowed other states to challenge the 1992 Federal Professional and Amateur Sports Protection Act that effectively allowed only Nevada, Oregon, Delaware and Montana to offer full or limited facilities in the $150 billion sports betting market.