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Entain posts revenue jump ahead of DraftKings bid deadline

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FILE PHOTO: A pedestrian walks past a branch of Ladbrokes in London
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By Sachin Ravikumar

(Reuters) -British gambling company Entain, the subject of a $22 billion takeover approach from U.S. rival DraftKings, reported higher quarterly revenue on Tuesday, led by stronger betting activity at its fast-growing BetMGM joint venture.

Entain, home to Ladbrokes and Coral betting shops as well as the bwin and partypoker online brands, said net gaming revenue rose 4% in the three months to Sept. 30 while revenue from online sports betting jumped 12%.

The results come a week before a takeover rules deadline requiring DraftKings to make a firm bid for Entain or walk away. DraftKings' $22 billion offer is double a bid Entain rejected from joint venture partner MGM in January.

Some analysts say that strong results and signs of progress on major initiatives, such as U.S. expansion, could convince Entain to reject DraftKings' offer on the grounds that it undervalues its prospects.

Entain and MGM's jointly owned BetMGM online sportsbook grew its online gaming market share to 32% for the three months to Aug. 31, compared with 30% for the quarter to June 30. The venture launched a national advertising campaign to coincide with the start of the National Football League (NFL) season last month.

BetMGM is viewed as a major factor driving DraftKings' interest in Entain. The U.S. venture has grown steadily and challenged FanDuel owner Flutter, the No.1 player in the sports betting and online gaming market.

MGM has said that any deal in which Entain or its affiliates end up owning a competing business would require its consent.

"The BetMGM JV is making a credible push for ... market leadership," analysts at Peel Hunt said in a client note on Tuesday, calling the business a "roaring success".

"This could be the perfect time for Entain to sell out of the BetMGM JV if MGM can be pushed to overpay," they added.

Like its rivals, London-listed Entain has enjoyed a boom in online gambling through the COVID-19 pandemic, with events such as last summer's European soccer championship and the NFL having helped to revive sports betting.

Dealmaking in the industry is also heating up as the United States opens up to sports betting and companies look to expand into more developed gambling markets such as Britain.

Meanwhile, gambling volumes at Entain's betting shops, long a feature of Britain's high streets, were above 90% of pre-pandemic levels, while retail betting activity was steadily recovering in Europe, Entain said.

The company also maintained its forecast for annual core earnings of 850 million to 900 million pounds ($1.16 billion to $1.22 billion).

($1 = 0.7350 pounds)

(Reporting by Sachin Ravikumar in BengaluruEditing by Sriraj Kalluvila and David Goodman)

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