By Skip Charles in Vegas

We owe a hat-tip to Front Office Sports for this sugar plum:

Casino operator Boyd Gaming, which owns Valley Forge Casino outside Philly, has approached Penn Entertainment, the operating partner of ESPN Bet, about a potential takeover, according to a Reuters report.

The proposed deal—likely premised in part on Boyd Gaming’s interest in Penn Entertainment’s land-based casinos—still faces a variety of obstacles, including the need for approval from regulators and ESPN parent Disney.

But the fact it’s even being discussed shows the pressure that exists in this consolidating business. No specific prices for an acquisition have been disclosed; the two companies have a combined market value of nearly $17 billion.

Despite Penn Entertainment’s stated intent to reach a 20% market share with ESPN Bet by 2027 in its $2 billion deal with the sports media giant, early progress in many key states shows the big gap that still remains.

In key states such as Pennsylvania, Massachusetts, and Illinois, ESPN Bet is claiming about 5–6% of the market. The brand is set to debut in New York later this year, but the steep uphill climb persists for ESPN Bet and every other market upstart. Industry titans FanDuel and DraftKings, meanwhile, continue to control about 75% of the market combined.

In part because of those factors, activist investor The Donerail Group recently wrote the Penn Entertainment board, questioning whether the directors “are really just riverboat gamblers, content with doubling down after each loss—of shareholder capital, of management confidence, of board credibility.”

Boyd Gaming owns a 5% stake in FanDuel, a holding that would likely need to be sold should the Penn National acquisition happen.

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