British competition authorities have revealed their intention to review the merger between the two leading gambling operators Flutter Entertainment and The Stars Group.
As announced by the Competition and Markets Authority (CMA) of the UK, the body would investigate the announced £10-billion deal and whether it would have a significant negative effect on competition in the local gambling sector. Such probes are not something new for the CMA. In fact, the action follows the last-minute intervention of the Authority into a combination deal between the food delivery platforms Takeaway.com and Just Eat, which resulted into the body forcing the two companies to reconsider the merger’s timetable.
Some analysts have expected an investigation into the deal between the two gambling companies to take place, considering the recent moves of the competition and markets watchdog to focus more on online competition issues.
Flutter Entertainment and The Stars Group announced their all-share merger at the beginning of October 2019. As a result of the deal, the global gambling industry will see the creation of the largest online gambling operator by revenue. Brands controlled by the two gambling giants currently hold approximately 40% of the British online sports betting market.
According to estimates provided by Redburn analysts, the two companies combined control about 26% of the total online gambling sector in the UK, which is pretty close to the 25% threshold over which the competition regulatory body takes an interest and initiates an investigation.
The £10-Billion Merger Expected to Be Finalised in Q2 or Q3 of 2020
The merger between The Stars Group and Flutter Entertainment is expected to be finalised in the second or third quarter of 2020 depending on the findings of the CMA. If the deal is successfully completed, it is set to create the biggest online gambling company by revenue worldwide. The deal between the two gambling companies could potentially be reviewed by Australian authorities, too, as both brands are heavily present in the country’s gambling market.
This is not the first time when the CMA starts an investigation into a planned merger of two gambling companies. Back in 2016, the Competition and Markets Authority ordered British gambling firms Ladbrokes and Gala Coral to dispose of up to 400 retail betting shops in order to get an approval for their £2.2-billion merger. Without the outlet sale, the combined operator would have owned about 4,000 retail betting shops across the UK.
The quick growth registered in the global and local online gambling market over the last few years has resulted in further consolidation across the sector. Lately, Ladbrokes Coral was acquired by GVC Holdings, while Paddy Power joined forces with the betting exchange Betfair. Apart from that, the UK gambling market has become more demanding to operators due to the stricter regulatory regime of the authorities, not to mention the most recent changes following the exodus of the country from the European Union (EU).
- Author
Olivia Cole
