News broke on Tuesday that DraftKings has offered to purchase partypoker parent company Entain for $20 billion. If the offer is accepted, the deal makes for some interesting dynamics for ROAR Digital, which runs the partypoker US Network.
ROAR is a partnership between Entain and MGM Resorts in the US. The company is a market leader in sports betting and online gaming as well.
A potential deal would mean DraftKings could own part of a major competitor in the US market. That’s something Entain has already taken into account and any potential acquisition would require that aspect of the deal to be sorted out.
“Any transaction whereby Entain or its affiliates would own a competing business in the US would require MGM’s consent,” the company said in a statement to CNBC. “MGM will engage with Entain and DraftKings, as appropriate, to find a solution to the exclusivity arrangements which meets all parties’ objectives.”
A look at partypoker US operations
An agreement between the two companies could come with some unique repercussions for the US poker platform. Partypoker US Network offers legal, regulated online poker in three states utilizing the following poker skins:
- New Jersey – partypoker, BetMGM, Borgata Poker
- Michigan – BetMGM
- Pennsylvania – BetMGM, Borgata Poker
All states in the network operate in a “ringed-in” environment, meaning each state plays against others within that state. However, those player pools could eventually be combined as states finalize interstate compacts.
How the potential DraftsKings-Entain deal would affect the US poker operation remains to be seen. One potential scenario could find MGM buying its partner out in the US operation. MGM made its own Entain buyout attempt earlier this year in an $11 billion all-stock offer.
The company rejected that and DraftKings has now upped the ante for Entain with a mix of stock and cash. CNBC believes that value is $20 billion but other media outlets have disputed that figure. Some in the industry believe the offer overvalues Entain.
Either way, there are some ramifications for the US regulated online poker market. Could DraftKings add all of ROAR Digital? That seems unlikely as the company already has a major sports betting platform in the US.
Parting with its own MGM sports betting and online casino platform may not make sense for MGM. Sports betting is now legal in 25 states plus Washington D.C. and the company is bullish on the industry’s growth.
DraftKings would become a massive sports betting, online casino, and online poker operation. Internationally, partypoker remains one of the biggest online poker companies in the world with the platform available in numerous countries.
The company has undergone growth during the pandemic, also experienced by others as well in the industry. Party recently wrapped up the World Poker Tour World Online Championships on the site.
That continues a partnership with the tour also seen in the US. The WPT Online Borgata Poker Open wrapped up Tuesday in New Jersey with Orson Young taking the title for $195,748.
A deep history in poker
Partypoker began in 2001 with Poker Hall of Faner Mike Sexton as a co-founder. The company grew quickly during the poker boom with GVC Holdings (now known as Entain) acquiring the brand in 2016 for $1.1 billion.
The WPT partnership also has deep roots at the company. Party/GVC even owned the WPT from 2009-15 before the tour was purchased by Ourgame International for $35 million.
While sports betting and online casino betting are the main targets in the offer, real money online poker could complement DraftKings’ platform. Party’s millions of players instantly become potential DraftKings customers.
Seamless integration among poker, sports, and casino gaming makes using the other offerings simple. Anything as of now remains speculation and it will be interesting to see if Entain takes the deal. In the meantime, the MGM/US issue will have to be addressed before going forward.