DraftKings Inc. is abandoning its approximately $22-billion proposal to purchase BetMGM-partner Entain Plc, slamming the brakes on a potential deal that could have caused a major shake-up in the sports betting industry.

Boston-based DraftKings said Tuesday that, following further talks with Entain’s board of directors, it will not make a concrete bid for the U.K.-headquartered firm. 

“After several discussions with Entain leadership, DraftKings has decided that it will not make a firm offer for Entain at this time,” said Jason Robins, chief executive officer of DraftKings, in a press release. “Based on our vertically-integrated technology stack, best-in-class product and technology capabilities and leading brand, we are highly confident in our ability to maintain a leadership position and achieve our long-term growth plans in the rapidly growing North America market.”

Entain’s board said Tuesday that it “strongly believes” in the future prospects of the company, and highlighted management’s plans for further growth, including via “leadership in the rapidly growing North American market” with BetMGM. 

“As a result the Board is confident in Entain’s ability to continue to deliver material value for its shareholders going forward,” the directors added. 

Under U.K. takeover rules, DraftKings is now blocked from making another offer for Entain for six months. Still, DraftKings said it reserves the right to set aside its statement and the related restrictions if certain things happen, including if an agreement is struck with Entain’s board or if another company announces its firm intentions to make an offer for Entain. 

Entain’s business includes Ladbrokes, partypoker, and a 50-50 partnership with casino operator MGM Resorts International on BetMGM, which competes with DraftKings on online sports betting and internet gambling. 

The board of Entain had confirmed in September that it had received an approximately $22.4-billion purchase proposal from DraftKings that was made up of stock and cash. 

At the time, Entain’s board noted that DraftKings had until October 19 to either announce their firm intention to make an offer or to announce they would not. That deadline was recently extended to November 16, with Entain’s board saying some issues needed to be resolved, such as “governance rights and value protection for the combined entity’s stake in BetMGM.”

Entain’s partner on BetMGM, MGM Resorts, had warned its consent was needed for any transaction that would lead to Entain or its affiliates owning a competing internet sportsbook or casino in the U.S. Entain also rejected an approximately $11-billion acquisition offer from MGM earlier this year, arguing it was too low.

Expensive habits 

DraftKings’ decision to walk away from a potentially massive transaction could pour cold water on the recent boom in mergers and acquisitions activity in the online sports betting and gambling industry. It also keeps two of the biggest online sportsbooks in the U.S. separate, at least for the time being. 

Companies could still have to join forces out of necessity. There has been talk of further consolidation in the legal sports betting industry, especially with the recent spending spree by sportsbook operators on customer acquisition and marketing that has meant generous sign-up and deposit offers for bettors.  

That may not last forever. 

“I think there’s only a certain number of companies that are going to be able to sustain that level of spend,” FanDuel CEO Amy Howe recently told CNBC.

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