Paddy Power Betfair have a Flutter on Stars Group

Mergers in the online gambling industry don’t get bigger than this.

Flutter Entertainment, holding company of the merged Paddy Power and Betfair brands (and previously known as Paddy Power Betfair), will be joining forces with Canadian based Stars Group.

The merger, still subject to shareholder and regulatory approval in the UK, Canada, Australia, Ireland and the US, will create the world’s largest online gambling business.

Expectation for completion is some time in the second half of 2020. Should the deal go through, current Flutter shareholders will own around 55% of the newly formed giant, with Stars Group shareholders owning the remainder. It will be headquartered in Dublin and listed on the London Stock Exchange.

The merged entity would own a raft of well know brands including Paddy Power, Betfair, Pokerstars, FullTilt and Sky Betting & Gaming and be worth almost €11 billion. Combined, these brands generated revenues in excess of €4 billion last year, from over 4 million active customers in over 100 countries.

Flutterer Entertainment was formed not that long ago following the merger of Paddy Power and Betfair back in 2015. Meanwhile the Stars Group expanded significantly only recently with the multibillion dollar acquisition of Sky Betting and Gaming.

This latest deal continues the industry’s trend of consolidation, which has reached the point where recently merged entities are doubling up again to create behemoths.

With margins being squeezed as more jurisdictions around the world regulate a tax online gambling operations, mergers and acquisitions are seen as a path to cost savings. This present deal is expected to generate around €150 million in savings each year. Good for shareholders, not so good for back office staff who may find themselves a 50/50 chance of keeping their job.

The market welcomed the news (like I say, good for shareholders) with Flutter’s share price jumping 7% on the announcement.

Should the deal go through, customers will probably not notice any difference to their services. Although perhaps live dealer players could one day be exposed to the mother of all shared-exclusive table areas. It would be so big that it would require a whole new studio to be built. As to whether that studio is run by Evolution or Playtech…now that’s a question.