With the aim of making a sizable dent in the growing sports gambling market in the United States, two of the largest brands in the online betting industry have decided to join hands and go together.
The owner of the world’s largest poker site, PokerStars The Stars Group of Canada, will be bought by Flutter Entertainment the owner of the Irish gambling firm Paddy Power.
The merger of the two companies will result in the creation of the biggest online betting and gaming company in a deal that would be a an all-share merger, the two companies announced recently. According to Refinitiv data, the combined market value of the tow companies was almost $12 billion according to the closing price of the companies on Tuesday.
The two companies said in a joint statement presented to investors that after the merger, the new combined entity will have a total number of active customers of more than 13 million spread across more than 100 markets internationally.
Apart from being the owner of Paddy Power, fantasy sports brand FanDuel and Australia’s Sportsbet is also owned by Flutter.
Last year, the US Supreme Court allowed the opening up of the sportsbetting industry in the country after it allowed states to legalize it which has now made the US a very lucrative market for sports betting companies and that would be the focus of the two companies after the merger.
“The opening up of the US sports betting market is perhaps the most exciting development in the industry since the advent of online betting,” Flutter CEO Peter Jackson said on a conference call with analysts.
According to sports media company The Action Network, 18 states of the US have already legalized online sports betting activities and it is expected that more states will follow suit.
What makes the US a prime focus for the two companies is that betting rules are being tightened in the regulators in the United Kingdom and Germany while the US is legalizing the business.
Jackson said that it is expected that in a short time, regulators in Germany will raise questions about how many German states would allow betting to continue.
The size of the global gambling market was about $450 billion in 2018 and 11 per cent of that was accounted to for by the online betting business, the companies say. “Flutter and TSG are confident that there remains a long runway of growth left for online and mobile gambling,” they added.
Had the two companies merged earlier, their combined revenues from the business in 2018 would have been about $4.7 billion in 2018.
About 55 per cent of the combined entity will be owned by Flutter shareholders according to the deal, while just over 45 per cent will be owned by the shareholders of TSG. The headquarters of the new entity will be in Ireland while its primary listing would will be at the London Stock Exchange while a secondary listing will be on Euronext Dublin.
(Adapted from CNN.com)