Despite the Brexit agreement reached between Prime Minister Boris Johnson and the European Union (EU), there are still some uncertainties associated with the withdrawal of the UK that will affect all aspects of the economy and public life, including the gambling and entertainment sector.
Yesterday, British Prime Minister Johnson and the President of the European Commission Jean-Claude Juncker revealed that the two parties have finally reached an agreement about Brexit. Still, it remains to be seen whether the deal would get enough support in the British Parliament so that the country really exits the EU on the planned date, which for now remains October 31st.
Regardless of the difficulties which the British gambling sector would face following the country’s exodus from the EU, the Brexit with a deal between the two parties is definitely a preferable option. In any case, some analysts believe that the local gambling market would remain highly competitive.
This could mean that the recently announced deal between Flutter Entertainment and The Stars Group might put the Ireland-based bookmaker in a position of the gambling operator with the largest and most diverse presence on a global scale. Earlier in October, the company announced its all-share deal with the Canadian gambling group so that the combined entity was valued at £14.2 billion, including debt. The completion of the merger would provide Flutter Entertainment’s investors with majority ownership of a new gaming force in a greatly competitive market, offering the company presence in areas including sports betting and poker.
FLutter Entertainment Will Get Better Presence Through Gambling Brands Worldwide
According to preliminary estimates, the combined group would be able to generate annual revenues of no less than £3.8 billion with ease, but probably the biggest benefit from the merger is the fact that the new company would hold a 25% share of the US sports betting market.
Flutter Entertainment already operates a variety of brands, some of which have an established presence away from its domestic market. The company operates four divisions – a retail unit which currently operates 626 Paddy Poker betting outlets on the territory of the UK and Ireland, a US division represented by Fanduel, a brand that specialises in daily fantasy sports (DFS), an Australian unit, which includes the Sportsbet brand, and an online division that has also been marking growth recently.
Still, regardless of the expanded presence Flutter Entertainment already has on the global gambling market, the acquisition of the Canadian operator The Stars Group, which purchased the British betting brand Sky Bet in 2018, would be a transformative one, as it would strengthen its positions, especially with a better presence into the recently liberalised US sports betting sector. Apart from that, Flutter Entertainment would also get an improved presence in Australia, where The Stars Group bought the local business of William Hill in 2018.
It is beyond doubt that Flutter Entertainment entered this deal in order to survive in the highly-competitive gambling sector in the UK and Ireland. Over the last few years, the sector there has been subject to a regulatory crackdown, with the competent authorities imposing stringent measures to guarantee a safe and transparent gambling market. The uncertainty surrounding Brexit added to the turbulence and has already seen a number of companies struggling to deal with all the requirements, something which has fuelled a wave of consolidation in the sector, with ongoing mergers and acquisitions.
- Author
Olivia Cole
