Shares in Paddy Power firm rise 4% as it settles multi-million dispute in Kentucky

Shares in Flutter -- which owns Paddy Power, PokerStars and Fanduel in the US -- rose 4% in the session to bring its gains to 10% since the start of the year

Paddy Power-owner, Flutter has agreed to pay $200m (€170.5m) to the Commonwealth of Kentucky in addition to $100m previously forfeited to settle an $870m judgement reinstated last year. 

Shares in Flutter -- which also owns PokerStars and Fanduel in the US -- rose 4% in the session to bring its gains to 10% since the start of the year, valuing the international firm at €32.3bn. The shares have also been helped by a new round of dealmaking in the US.

The original award of damages in Kentucky was made in 2015 against The Stars Group - which Flutter bought in a $6bn deal in 2019 - but was vacated in its entirety by the Kentucky Court of Appeals three years later, Flutter said last year.

The litigation had sought recovery of alleged losses by PokerStars players in Kentucky from 2006 and 2011. Flutter and the Stars Group said it had relied on a centuries-old statute that was intended to allow individuals who incurred gaming losses to bring an action against their opponents.

Flutter said that the Commonwealth of Kentucky had agreed to cease all further actions with respect to the case and that it considers the matter closed. 

Meanwhile, Entain's shares hit a record high after the Ladbrokes-owner gambling group received a $22.4bn takeover proposal from US rival DraftKings, double a bid it rejected from joint venture partner MGM in January.

Dealmaking is picking up in the online gambling industry as the US opens up to sports betting and companies look to build scale and tap the expertise of foreign companies in more developed markets. Shares in Entain, which also owns Coral betting shops as well as newer online brands such as Bwin and Partypoker, jumped as much as 11%.

"The board of Entain will carefully consider the proposal," said Entain, led by new CEO Jette Nygaard-Andersen. DraftKings has until October 19 to either make a firm bid or walk away.

DraftKings' interest comes weeks after it clinched a $1.6bn deal to buy US rival Golden Nugget. As for its bet on Entain, analysts said much would depend on the company's US joint venture partner, MGM, which said any deal that would make Entain a competitor in the US would require its consent.

JP Morgan analysts said that to win MGM's approval, DraftKings may have to sell Entain's 50% stake in BetMGM to MGM, leaving DraftKings with Entain's rest-of-the-world operations, as well as its technology and expertise.

That would mirror the fate of William Hill, another betting brand that US group Caesars bought in a €3.4bn deal earlier this year, only to then sell its non-US operations.

Alternatively, DraftKings could seek to merge with BetMGM, giving MGM a stake in the new company. "However, the deal would have to be attractive for MGM to give up its desire to have control," the JP Morgan analysts said.

BetMGM, an online sportsbook for betting on NFL American football and NBA basketball games, controls 21% of the market versus DraftKings' 17%, according to RBC. Flutter-owned FanDuel is another major player.

The joint venture is targetting $1bn in revenues for 2022, while Entain - which along with MGM is investing $660m in the partnership this year - expects it to be in 20 US states over the next 12 months.

"Staid UK high street bookmakers are not an obvious fit for a US fantasy sports giant, but it's Entain's US sports betting venture with MGM that's drawn DraftKings eye," Hargreaves Lansdown analyst Nicholas Hyett said. 

Reuters and Irish Examiner