Flutter Entertainment, the owner of Betfair and Paddy Power, is buying The Stars Group for a total of $6 billion. When this deal is finalized, they will be the biggest online betting company in the world. This massive acquisition is part of the global gold rush where worldwide betting and gambling companies are all aiming to claim a stake in the newly legalized US market.
During May 2018 US legislation changed and the local gambling industry was finally released from the grip which PASPA had on it since 1992. This created a new underdeveloped and yet very lucrative market where global role players have been competing for a piece of the market share. Top runners for these claims were often the UK and Irish based betting and gambling companies who have years of experience. The very Irish Paddy Power is no different. Earlier this year FanDuel, the New York-based fantasy sports business was also acquired by them. Now they are bidding to receive their Canadian rival company, The Stars Group.
Through the deal, the stakeholders in Flutter will get a majority in shares of 55% in the gaming group, which is also the owner of Sky Bet. The combined revenues for the company accumulated to £3.8billion in the previous year. The deal is expected to send the share prices of Flutter up with 20% to a total of £91.96. From the agreement, there will also be a commercial tie-up where Fox Sports which is owned by the Canadian TSG, will earn the right to buy 18.5% of FanDuel which is owned by Flutter at market value from 2021. The deal will result in Flutter serving a market of 4 million gamblers in about 100 markets all around the globe. This is exponential growth for the company which is already very well established in specific markets like Australia and then, of course, Ireland and the UK.
In 1988 three gambling operators situated in Dublin merged to form Paddy Power. During 2016 they acquired Betfair for $10 billion, and now they are growing even much more with the acquisition on the table. The head office of the company will still be Dublin-based and will be run by the chief executive of Flutter, Peter Jackson. Jackson stated that through combining Flutter and TSG, there would be a substantial amount of value-added to their shares. He also mentioned that now they will have an impressive portfolio which will be a combination of brilliant recreational brands and exceptional products delivered on platforms that are at the edge of technological advancement.
Last year Flutter had to settle a penalty of £2.2 million for failure to promote responsible gambling by Paddy Power and Betfair. This case was partially based on theft charges against a problem gambler. Now the chairman of Flutter, Gary McGann, stated that the group will deliver a combined voice towards always promoting responsible gambling globally.