Star Group merger could see Flutter sell Paddy Power

by Noah Taylor Last Updated
Star Group merger could see Flutter sell Paddy Power

Last week it was announced gambling operators, Irish based Flutter Entertainment PLC and Canada’s The Stars Group would merge in a  £10 billion deal.

The deal would effectively create the largest gaming and sports betting revenue generating entity in the world, according to Casino News Daily.

However, in a report from The Sunday Times, it is believed that Flutter may be forced to part with some of its brands in order to get the blessing of competition authorities.

The key entity mentioned of Flutter’s brands is Paddy Power. Paddy Power operate several betting shops across the United Kingdom and Ireland and also offers online sports betting, online poker,  bingo, casino and games.

Independent financial services organisation Canaccord Genuity believes Flutter, whose investors will hold a 55% stake in the combined group, could be ordered to sell both retail and online brands in order to get approval from the UK’s Competition and Markets Authority to facilitate the merger.

The authority is entrusted with ensuring that companies do not become too dominant within one market to the detriment of competition and customer choice.

The merged operator will own some of the world’s most popular brands in gambling, including Sky Betting & Gaming, Paddy Power and Betfair.

Given the importance of The Stars Group’s presence in the US in sports betting with its BetStars and Sky Bet brands, Canaccord Genuity believe selling Paddy Power would be a ‘logical decision’ for Flutter and the new entity.

Sale could be a conundrum

However, selling Paddy Power would be a bit of a conundrum for new group whose headquarters are set to be located at the current Paddy Power premises.

Morgan Stanley analysts believe the combined entity’s online betting revenue will be 50% higher than rival bet365’s and around double GVC Holdings, who own Ladbrokes Coral and several other popular brands.

Last year’s strikedown of a federal ban on sports betting in the US has helped pave the way for what could be the world’s largest athletic gambling market. As a result, the combined group of Flutter and The Stars Group could be poised to make a strong presence within the US.

The new entity will also hold three of the market’s seven largest sports betting and online gambling brands. With such a grip on market share in the industry from the merger, it is expected that competition regulators will seek remedies to ensure the competition playing field isn’t totally skewed in its favour.

Flutter purchased fantasy sport giant FanDuel last year as it sought to establish a US asset in the wake of the supreme court’s decision to legalise sports betting, a ruling which triggered a race between UK bookmakers to enter the lucrative new market.

There may also be a flow on effect on the Australian betting market given Flutter also owns Australian betting organisation Sportsbet, who own an 18.1% share of Australia’s A$4.3 billion sports betting market. In addition, The Stars Group owns BetEasy who has a sizeable 8.1%.

The Stars Group acquired a larger presence in the UK sports betting market last year following its $4.7 billion acquisition of Sky Betting & Gaming (SBG), which has the largest active user-base in the UK.

The Stars Group also owns poker entities the PokerStars Championship, PokerStars Festival and MEGASTACK live poker tournament brands

Stars Interactive, the online gaming division for the group, has licences or related approvals to operate from 17 jurisdictions and offers its products and services in Europe, North America and other regions.

The combined entity is expected to be formalised in the second half of 2020 subject to regulatory approval.

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