Flutter Entertainment and The Stars Group in Gaming Changing Merger

Jason Reynolds

2 years ago

The Stars Group (TSG) and Flutter Entertainment are set to merge in a deal worth upwards of $10 billion.

Flutter Entertainment and The Stars Group are set to merge in a multi-billion-dollar deal. (Image: London Stock Exchange Group)

Announced on October 2, the transaction will see Dublin-based Flutter Entertainment acquire TSG through an “all-share combination.”

The non-cash transaction will see Flutter shareholders hold a 54.64 percent stake in the new company, with TSG owning 45.36 percent.

Flutter Entertainment to Lead Industry Giant

In publicizing the news, TSG stated that combined revenue between the two companies would have been $4.7 billion in 2018. Based on that, Flutter Entertainment and The Stars Group will become the biggest online gaming operator in the world.

Commenting on the merger, Flutter CEO Peter Jackson said it will “turbocharge” the company’s existing strategy. Specifically, the new entity will look to solidify Flutter’s existing position in the UK and Europe by leverage TSG’s international resources.

The US will remain a major target but Jackson is also sizing up opportunities in Spain, Italy, Germany and Australia.

All verticals, including poker, are set to benefit from the deal according to TSG’s press release. By combining their resources, both companies believe they can develop and maintain “best-in-class” betting options.

For Flutter, the parent company of Paddy Power Betfair, TSG’s North American connections will be most beneficial. Although the company already has interest in the US, most notably with horse racing TV station and betting network TVG, it lacks the same brand recognition as TSG.

However, thanks to TSG’s recent link-up with FOX Sports, the Irish operator will have increased branding opportunities in North America.

Industry Reacts at TSG Makes Another Major Move

In light of the announcement share prices soared. TSG’s value jumped by 50 percent, while Flutter Entertainment shares gained 20 percent in premarket trading on October 2.

Interestingly, share prices across the industry spiked. In much the same way Amaya’s $4.9 billion takeover of PokerStars in 2014 sparked a series of similar transactions, analysts believe more deals are in the offing.

As regulatory shifts take hold and new markets open up, mergers have become the best way for the industry leaders to remain dominant. Indeed, following it’s 2014 acquisition Amaya aggressively sought to broker additional deals.

Although none materialized, Flutter Entertainment and The Stars Group are now leading the next wave of merges. For the likes of GVC and William Hill, swift responses may be necessary.

For online poker players, the latest news will undoubtedly create new opportunities. However, it may make poker less of a force on the network.

With Paddy Power Betfair being major players in sports betting, TSG will want to enhance its own interests in this area ahead of any poker innovations. Despite that, PokerStars still has enough interest to remain an integral part of the newly formed gaming group.

Therefore, while poker’s contributions may lose ground to other verticals, the merger shouldn’t adversely affect PokerStars or its players.