Another major sports betting company is reportedly taking a look at PENN Entertainment.
This one could send shockwaves through the industry.
TheDeal.com cited sources that say Flutter Entertainment, owner of popular U.S. sportsbook FanDuel and a New York Stock Exchange-listed company, is “sizing up” the company that operates ESPN BET.
The report sparked a 5% rise in Flutter’s stock on Friday.
This isn’t the first talk of a PENN takeover. Sources told Reuters in late June that Boyd Gaming approached the gambling competitor about a potential acquisition.
Boyd owns a 5% stake in FanDuel and operates 28 properties across 10 U.S. states.
This comes on the heels of Donerail Group, an activist investor, saying in May that PENN should put itself on the open market as it could attract double its trading price in a sale.
Potential roadblocks
Flutter, a global sports betting and gaming company that also owns brands like Paddy Power, PokerStars, and Sportsbet, has undergone some power restructure at the top.
The Irish-based company replaced its CFO in May, while two new board members were added this month. Is the well-funded company ready to take on a task as large as acquiring PENN, which operates more than 20 U.S. casino resorts?
The agreement with ESPN could also be a roadblock to a potential sale. PENN paid $1.5 billion to acquire the naming rights for the ESPN BET platform, which operates in 18 U.S. states.
The mobile sports betting operator has yet to cut deep into the market-share stranglehold of FanDuel and DraftKings, despite the brand upgrade from Barstool to ESPN.
It’s an attractive name, but how the Disney-owned company will feel about an acquisition is unknown, as is a potential buyout of the brand agreement.
Also, FanDuel and ESPN BET are competitors that operate in the same U.S. states, something regulators could potentially have issue with.
