Boyd Gaming has expressed interest in acquiring Penn Entertainment, valued at more than $9 billion, including debt, sources said according to Reuters. This could become the largest merger in the U.S. gambling industry since Eldorado Resorts’ $17.3 billion acquisition of Caesars Entertainment in 2020.
This potential merger presents significant challenges for Boyd, a smaller company with a market value including debt of $7.8 billion. The acquisition would require substantial financial resources and would need approval from regulators across several states where both companies operate.
In addition to regulatory hurdles, Boyd must also address concerns from Walt Disney, which holds a strategic partnership with Penn through its sports network, ESPN. The sources, who requested anonymity, emphasized that there is no certainty Penn will enter into negotiations with Boyd.
Penn Entertainment, which declined to comment, operates 43 casinos and racetracks across 20 U.S. states and offers online sports betting and casino gambling. Last year, Penn entered into a $1.5 billion licensing agreement with Disney, allowing it to use ESPN’s brand for its online sportsbook, ESPN Bet, for an initial period of 10 years. ESPN holds rights worth about $500 million to purchase Penn stock under this deal.
This partnership has strengthened the position of Penn CEO Jay Snowden, particularly after a troubled acquisition of Barstool Sports. Penn acquired Barstool for $550 million but later sold it back to founder Dave Portnoy for $1. Additionally, Penn acquired Score Media and Gaming for $2.1 billion in 2021.
Activist investors, such as Donerail Group, have criticized Penn’s digital business investments, urging the Pennsylvania-based company to consider a sale. However, Truist Securities analysts recently indicated that Penn’s management is unlikely to deviate from its current operational plan, particularly with the anticipated success of the ESPN Bet product and the upcoming football season, coupled with higher and volatile interest rates impacting M&A activities.
Boyd Gaming, headquartered in Las Vegas, owns and operates 28 gaming properties across 10 states, manages a tribal casino in northern California, and has an online casino gaming business. Boyd also holds a 5% stake in sports-betting operator FanDuel Group.
A merger between Boyd and Penn would require approval from various stakeholders, including gaming regulators and landlords such as Gaming & Leisure Properties. Overlapping operations in some states could necessitate divestitures by Boyd, according to the sources.
Disney and Boyd did not immediately respond to requests for comment.