Flutter and Boyd Gaming Eye Penn's Digital Assets Amid Investor Pressure
This news boosted Penn's stock by 4.22% by midday on Friday,
Activist investors are urging Penn Entertainment to sell its digital gaming division. Amidst this, reports from The Deal suggest that Flutter and Boyd Gaming might collaborate on a potential transaction. Boyd Gaming holds a 5% stake in Flutter and partners with Flutter’s FanDuel for both retail and digital sports betting in the US. This news boosted Penn's stock by 4.22% by midday on Friday, while Flutter's stock remained mostly unchanged after a morning rise. Boyd Gaming's stock also stayed relatively flat following an early surge.
“Adding Flutter into the equation with Boyd of a potential Penn acquisition makes it more than interesting,” gaming consultant Brendan Bussmann told iGB. “It’s a back door into the ESPN brand for online, but would also give a brick-and-mortar presence to Flutter.”
On Friday, Seeking Alpha reported, “Flutter (FLUT) may want to partner with Boyd Gaming (BYD) as the owner of FanDuel is interested in Penn’s interactive assets, according to a report from TheDeal.com on Friday, which cited unidentified sources.”
Representatives from Flutter and Penn declined to comment on these reports.
Penn Interactive launched its ESPN Bet wagering platform on November 14 last year, after ending its partnership with Barstool Sports. Initially, ESPN Bet rolled out in 17 states and added North Carolina in March. The platform aims to capture a significant share of the digital sports betting market, where DraftKings and FanDuel currently dominate with about 80% of the market. ESPN Bet currently holds about 6% of the market share and is planning to launch in New York later this year after obtaining a license following WynnBet’s exit.
Rumors of an acquisition began in late May when the Donerail Group sent a letter to Penn's board. The letter criticized the 80% drop in Penn's stock over the last three years and highlighted management's consistent failure to meet guidance, along with their continued investment in underperforming interactive projects without a clear framework for returns.
“The growing pattern of guidance misses, alongside a demonstrated unyielding appetite to continue to invest in the company’s fledgling interactive projects, irrespective of past results and without a clear return framework, has significantly damaged the credibility of this management team and board of directors,” the letter stated.
