DraftKings discussed bid for William Hill owner 888

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US betting group DraftKings discussed a bid for William Hill owner 888 over the summer with some of the struggling UK betting operator’s top shareholders, according to two people briefed on the talks.

The early-stage discussions, which took place in June and July, are a sign of the increasing dominance of US operators in the betting industry, and how their financial firepower may yet drive a further wave of consolidation in the sector.

DraftKings’ chief executive Jason Robins held talks with a group of 888 shareholders — FS Gaming — about making an all-stock offer for William Hill owner 888, the people said. Advisers were present on both sides.

FS Gaming, which includes industry veterans such as former GVC chief executive Kenny Alexander, was at the time a top-five 888 shareholder. Robins met with FS Gaming’s Lee Feldman, a former GVC chair, to discuss the takeover plans, including the possibility of appointing Alexander as 888 chief executive, the people said.

Despite the plans falling through, DraftKings’ interest in expanding internationally through a possible acquisition of 888 underlines the expansion ambitions of US betting operators at the top of the $9bn a year industry after a Supreme Court verdict opened up the sector five years ago.

888 has been widely viewed by analysts as a takeover target because of its languishing share price resulting from management upheaval, compliance problems and a recent profit warning.

DraftKings did not approach 888 directly. The talks took place while 888’s chair Lord Jonathan Mendelsohn, who had been hunting for a new chief executive since January, was separately holding discussions with FS Gaming about the top management role.

DraftKings walked away after Mendelsohn revealed in mid-July that the UK gambling regulator had placed 888’s licence under review over concerns about a longstanding tax bribery probe into GVC’s business dealings in Turkey during Alexander’s time as chief executive. Mendelsohn has since appointed former Fortuna chief executive Per Widerström as 888 chief executive.

Any bid would have valued the London-listed company at a significant premium to its market capitalisation, which reached £550mn while discussions were taking place, the people said. But the biggest hurdle to any deal would have been 888’s £1.7bn debt pile, left over from the acquisition of William Hill’s non-US business from Caesars Entertainment last year, they added.

Entain, the rebranded version of GVC following its takeover of Ladbrokes, has set aside £585mn to settle a deferred prosecution agreement relating to the tax bribery investigation into its former Turkish business.

In an interview following third-quarter results last week, DraftKings’ Robins declined to comment on any discussions about a takeover. He added: “888 is one we’re aware of, we’ve certainly watched it over the years, I know there’s been quite a twisty, turny story.” “I don’t even think 888 is up for sale at this point,” Robins said.

Responding to a Financial Times query about the talks, DraftKings said that the company was “focused on the massive US opportunity in front of us”.

“We speak to a variety of companies regarding various matters in the normal course of business, and it is our general policy not to comment on the specifics of any of those discussions,” it added.

In 2021, DraftKings made an £18.4bn cash-and-stock offer for Entain but walked away after eliciting little interest from Entain’s board. Las Vegas-based casino operator MGM Resorts International, which runs a US joint venture under the name BetMGM, also had a bid rejected for the Ladbrokes owner. MGM has since launched BetMGM in the UK this year using technology from Sweden-based betting app LeoVegas, which it acquired for $607mn last year.

DraftKings’ US betting app overtook that of rival FanDuel in August as the biggest by monthly revenues.

A top-10 888 shareholder told the FT they would have taken an all-stock offer from DraftKings “very seriously”.

“I would have had to at least hear them out,” the shareholder said. “888 can help backfill DraftKings with technology and knowhow, and in the long-run DraftKings wants to take over the world.”

FS Gaming and 888 declined to comment.