Entain Faces Mounting Pressure: MGM Resorts Unlikely to Bid

In recent developments, US activist hedge funds Sachem Head Capital Management and Dendur Capital have expressed concerns about Entain's leadership and share price. Joined by Eminence Capital, these investors are dissatisfied with the company's current state. Despite this, MGM Resorts, a leading gaming and entertainment company, has announced its lack of interest in bidding for Entain. However, it may consider acquiring the remaining 50% share in its joint venture, BetMGM.

If MGM Resorts decides to bid for BetMGM, it could aim for a full acquisition, taking control of the brand's technology and revenues. The potential cost of acquiring 50% of BetMGM is uncertain, but Entain has confirmed BetMGM's significant market share in the US, making it the third-largest online gaming brand in the country.

Several factors influenced MGM Resorts' decision, including a failed previous bid and competition in the UK's regulated gambling sector with the launch of BetMGM. Moreover, BetMGM faced challenges in Ontario with Entain's Sports Interaction and bwin launches.

Goldman Sachs, recognizing Entain's ongoing issues, downgraded the company from buy to sell as its share price hit a three-year low. The investment bank lowered its price target for Entain, citing a larger-than-expected settlement regarding an HMRC investigation. Ben Andrews, a research analyst with Goldman Sachs, highlighted BetMGM's declining market share, predicting negative pro-forma online growth for Entain in Q4 2023 and H1 2024. He estimated a return to positive growth in H2 2024.