MGM Resorts (NYSE:MGM) is going to be a big player in online betting -- for better or for worse. The company has entered into (likely costly) partnerships with the NBA, MLB, NHL, and many teams across the country in an effort to attract sports betters to its mobile platform, BetMGM. Now, if reports are correct, it's trying to buy its partner in BetMGM, Entain (LSE:ENT), for over $11 billion.

The move may seem crazy on the surface. Entain isn't a well-known name in the U.S. and online gambling is a relatively small business, particularly in North America. But this may not be as crazy a deal -- or price -- as it seems.

Why MGM wants Entain

As MGM's 50/50 partner in BetMGM, buying Entain would allow MGM to own all of its local operations. And the potential for betting in the U.S. is huge. In November alone, New Jersey and Pennsylvania saw $931.6 million and $491.9 million bet on sports, respectively, and 80% and 91% of bets respectively are made online. Revenue is much lower than what's bet after paying off winners (typically 5% to 10% of all bets), but we're still talking about potentially a $1 billion revenue market from just these two states if the market keeps growing.

The U.S. market is still in a very nascent phase, with online betting of any kind only legal in 14 states. And only a few allow typical casino games or betting on things other than sports. As more states open online betting and more games open, it's feasible to see the online gambling business be worth tens of billions of dollars in revenue each year. And these digital games don't require the investment of billions of dollars in physical casinos, making it a very attractive market for MGM to own long term.

What Entain brings to the table

Beyond its stake in BetMGM, Entain is actually a very large company in the gambling world. The company operates brands like Ladbrokes, Bwin, partypoker, and Sportingbet.

The business generated $2.15 billion in revenue in the first half of fiscal 2020 and $472.5 million in EBITDA. For the full year, management expects to generate $976 million to $1 billion in EBITDA. When put that way, a price of $11 billion doesn't seem unreasonable at just over 11 times EBITDA, especially when you consider that Entain would bring MGM's business into Europe.

MGM needs a big move

Online gambling is clearly a big part of the future of gambling, and MGM doesn't want to miss out on the trend. Buying Entain may seem like a pricey move today, but it's more important strategically to MGM than anything else. Entain would give MGM a critical footprint in online gambling, allowing for growth in the U.S. and around the world. And that's worth the price, in my opinion.

MGM resorts A general view shows T-Mobile Arena (L), a joint venture partnership between MGM Resorts International and AEG, next to the New York-New York Hotel & Casino and parking garage in Las Vegas, Nevada, April 5, 2016. Photo: Ethan Miller/Getty Images

This article originally appeared in the Motley Fool.

Travis Hoium owns shares of MGM Resorts International. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.