Entain shares rose nearly 20% after CNBC reported US bookie Draftkings is lining up a bid.
The deal involves a cash and shares arrangement, which will see Entain shareholders receive stakes in DraftKings, which is listed in the US.
CNBC, which first reported the bid, said it is expected to be around 20 billion dollars (£14.6 billion), although sources close to the deal have told the PA news agency it could be higher.
Shortly after the report, Entain confirmed it had been approached by DraftKings, but did not reveal the size of the offer.
It said: “The board of Entain confirms that it has received a proposal from DraftKings to acquire Entain, the consideration for which would include a combination of DraftKings stock and cash.
“There can be no certainty that any offer will be made for the company, nor as to the terms on which any such offer may be made.”
It is the second time the company has faced a bid from a rival this year, with MGM offering £8.1 billion for the gambling giant in January.
That bid was rejected by the board for undervaluing the company and MGM walked away from any deal.
Both companies still have a US joint venture together, which has grown following the easing of gambling laws in the country.
DraftKings launched in the US in 2012 as a fantasy sports league business but has since become an online bookie, with revenues expected to hit one billion dollars (£730 million) this year.