CMA to determine the deal’s impact
The UK Competition and Markets Authority (CMA) is reviewing the planned £10bn ($13bn) merger between two gambling behemoths, Flutter Entertainment and The Stars Group.
The authority will be conducting its investigation to determine whether or not the deal could lead to a “substantial lessening of competition” in the UK’s gambling sector.
Flutter Entertainment owns numerous gambling brands, such as Paddy Power, Betfair, and FanDuel. The Stars Group is behind the world’s dominant online poker name, PokerStars, as well as Sky Betting and Gaming, among others.
Merger’s hold on the UK gambling market
When put together, The Stars Group and Flutter Entertainment brands would account for approximately 40% of market share in the UK online sports betting sector. According to Redburn analysts, the merger would control about 26% of the entire online gambling sector in the region.
merger would control about 26% of the entire online gambling sector
The CMA generally has a competition threshold of 25% when considering the market impact of potential mergers. The first phase of the CMA investigation is under way, with the decision deadline set for March 31.
The merger is expected to be finalized by the second or third quarter of 2020. If the CMA gives its go-ahead, the deal will see the formation of the biggest online gambling operation globally in terms of revenue.
Ensuring a competitive environment
The CMA was at the center of a significant gambling group merger in the recent past.
In 2016, it ordered to the Gala Coral and Ladbrokes merger to sell as many as 400 betting shops before getting approval for the £2.2bn ($2.87bn) deal. If the merger had gone ahead without this requirement, the newly formed group would have had 4,000 betting shops in the region.
The company, Ladbrokes Coral, was later acquired by GVC Holdings.
Future plans for the new company
As part of the planned merger with The Stars Group, Flutter shareholders will own a 54.6% share in the newly formed company. With headquarters in Dublin, Ireland, the business will have a listing on the Irish and London Stock Exchanges.
Plans include synergy savings of £140m ($182.7m) annually as well as access to more than 100 international markets.
The merged company will also be turning its eyes on the growing US sports betting market. Flutter already has a majority stake in sports betting operator FanDuel, while The Stars Group has a stake in Fox Bet.