British gambling firm Entain said that US fantasy sports betting company DraftKings had made a takeover proposal that valued it at $22.4 billion.
Under its current proposal, DraftKings plans to offer £28 per Entain share, representing a premium of 46.2% to the UK firm's Monday close.
Entain said it had earlier rejected a proposal from DraftKings to buy the company for £25 per share.
Entain's shares closed up 18% as the companies confirmed the approach, which would give the US firm access to the Ladbrokes Poker and bwin online betting brands.
DraftKings' takeover proposal comes after Entain had rejected an $11 billion offer from US-based MGM Resorts International in January, saying it undervalued the company.
But analysts expect MGM to return with a new bid as it has since accumulated more cash.
Entain and MGM already have a joint venture called BetMGM, an online sportsbook for betting on NFL and NBA games that controls about 21% of the market versus DraftKings' 17%, according to RBC Capital Markets.
Any deal in which Entain would own a competing business in the US would require MGM's consent, MGM said in response to DraftKings' approach.
The deal frenzy in the online gambling space comes at a time when regional operators are looking to expand and capture opportunities in states across the US opening up to sports betting.
In a transatlantic deal, Caesars Entertainment acquired Britain's William Hill, a traditional rival to Entain's Ladbrokes brand, in a £2.9 billion transaction earlier this year. Caesars is selling the non-US assets of William Hill.
Demand for online betting boomed during the pandemic as customers took to playing from home when casinos and betting shops were off-limits.
DraftKings, which allows users to enter daily and weekly fantasy sports-related contests, confirmed it had approached Entain but did not provide any additional details.
It bought rival Golden Nugget Online Gaming in a $1.56 billion all-stock deal last month.
Entain said DraftKings had until October 19 to make a firm offer for the company.