US casino group MGM Resorts has made an offer to buy the owner of Ladbrokes and Coral, valuing the bookmakers at £8.1bn.
Entain said on Monday that it had rejected the approach, leaving MGM until 1 February to make a formal takeover bid or walk away from the deal.
For companies wanting to take advantage of the deregulation, a Supreme Court ruling means foreign businesses must partner up with an American firm in order to enter the market.
MGM already has a partnership with Entain in the US while rival casino firm Caesars is expected to complete a £2.9bn takeover of William Hill in March.
MGM’s latest offer would give Entain investors 0.6 shares of the combined company for each share they currently own. It would mean Entain’s shareholders own 41.5 per cent of MGM.
According to The Wall Street Journal, the bid is backed by MGM’s largest shareholder, Barry Diller, who launched America’s Fox TV network.
Gambling on sporting events had been banned in the US since 1992 but a 2018 Supreme Court ruling allowed New Jersey to reintroduce it.
It meant other states could make their own decisions on allowing sports gambling, prompting a number of legislatures to follow New Jersey’s lead.
States are hoping that they can cash in on tax revenues but campaigners have warned of the threat of higher levels of gambling addiction.
The US casino industry, which has been stagnant since the 2008 financial crisis, has also been active in lobbying for liberalisation.
As of November 2020, 20 US states have legalised sports betting with bills going through courts in several others.