A potential deal for PENN Entertainment seems closer now than ever with Flutter Entertainment stepping into the mix.
Over the last few weeks, Boyd Gaming has been believed to be one of the frontrunners to buy PENN. Last week, it was reported that Flutter may be interested in partnering with Boyd on the deal.
In 2020, Flutter purchased the remaining public shares of FanDuel for $4.2 billion. As a result, they become the sole owner of one of the largest sportsbooks in the U.S.
Including Flutter in the deal could have a major impact on the Show Me State, especially if Missouri sports betting becomes legal in the near future.
Flutter might operate PENN’s sports betting interests
The Deal reported that should this partnership play out, it would be Boyd taking over PENN’s brick-and-mortar casino operations. That alone would certainly shake up Missouri’s casino landscape. It was reported that PENN was taking a Boyd purchase offer seriously.
In this scenario, Boyd would likely be forced to sell off some of its properties in Missouri, since this purchase would result in Boyd owning five casinos in the state. That’s more than a third of the state’s casinos.
Eldorado Resorts was in a similar position when it bought Caesars Entertainment. Missouri gaming regulators made them sell two properties before approving the deal.
The Deal reports that Flutter would probably command the sports betting side of PENN, both ESPN Bet and theScore. It was originally speculated that Boyd would take over ESPN Bet if it were the sole buying entity. But this potential partnership changes things.
When details of the alleged partnership arose last week, PENN’s stock jumped almost 5%.
Why a Flutter-Boyd partnership could work
On paper, Flutter makes sense to take on the sports gambling aspect in the deal. Flutter is the parent company of FanDuel and operates other brands like Sky Betting & Gaming, Sportsbet, PokerStars, Paddy Power, Betfair, and TVG. The company has been incredibly successful, especially in the sports betting space with FanDuel, one of the industry leaders.
Flutter and Boyd are no strangers. Boyd owns a 5% stake in FanDuel. That relationship helped FanDuel expand in several states across the US.
Boyd brings its experience in the retail space. Since its inception nearly 50 years ago, the organization has blossomed into one of the country’s most successful entertainment companies. But it doesn’t boast a major player or experience (compared to other organizations) in the online sports betting space.
Enter Flutter.
Disney connection adds to recent moves by both companies
Both Flutter and Boyd have made structural changes in recent months.
Former Disney CFO Christine McCarthy was recently appointed to Flutter’s board of directors. Disney owns ESPN, which partnered with PENN to run ESPN Bet. That’s certainly a connection and one to keep in mind if these talks go further.
At the same time, Flutter added Robert Bennett to its board. Both his and McCarthy’s appointments seem to signal that the company is ready to make some sort of move.
The same could be said for Boyd. The company appointed Michael Hartmeier to its board last month. Interestingly, Hartmeier has crossed paths with PENN CFO Felicia Hendrix. The two worked together at Barclays and Lehman Brothers.
Less than 10 days after Hartmeier was appointed to Boyd’s board, the report of Boyd wanting to purchase PENN emerged.
Several pieces need to be sorted out
While Flutter and Boyd’s joining forces seem like a great fit on paper, it’s easier said than done. Having two companies come together to purchase another is no simple task. If anything, it makes the process more complex.
While PENN’s small stock jump is a pleasant surprise, there is plenty of ground to make up. PENN’s interactive assets are valued between $500 million and $1 billion, but it paid $2.1 billion for the Score in 2021. It also lost about $500 million by untying itself from Barstool Sports last year.
The Missouri Gaming Commission would likely need to work with Boyd to straighten out its property situation if there were a sale. That would have to happen in all states where Boyd might end up with a near-monopoly in the casino industry.
Should Missouri residents vote yes to sports betting in November, ESPN Bet, which already operates in 18 states, will likely also be available in the Show Me State.
