Two of the biggest names in the world of online betting are coming together in a merger as they attempt to take advantage of the prospects in the United States after the Supreme Court has finally legalized sports betting.
Flutter Entertainment (PDYPF), owner of Irish gambling firm Paddy Power, is buying The Stars Group (TSG) of Canada, which owns the world's biggest poker site PokerStars as well as Sky Bet, for a total of $6 billion.
On Wednesday, October 2, the companies announced they agreed on an all-share merger, thereby creating the world's largest online betting and gaming company. According to Refinitiv data, the closing prices on Tuesday for both companies were almost $12 billion.
The combined companies stated during a presentation to investors that they would now have more than 13 million active customers in over 100 international markets.
Aside from Paddy Power, Flutter owns Betfair, Australia's Sportsbet and fantasy sports site FanDuel.
The newly formed group will be mainly focusing on the United States, after the US Supreme Court finally allowed the legalization of sports betting last year. According to sports media company The Action Network, 18 states have since legalized online sports betting with more expected to do the same.
During a conference call with analysts, Flutter CEO Peter Jackson said, "The opening up of the US sports betting market is perhaps the most exciting development in the industry since the advent of online betting."
Both companies say the global gambling market in 2018 was worth around $450 billion, and 11% of that came from online betting.
The annual revenue of the group in 2018, when combined, would have been £3.8 billion ($4.7 billion).
They said, "Flutter and TSG are confident that there remains a long runway of growth left for online and mobile gambling."
The deal shall result to Flutter shareholders owning around 55% of the combined group, with TSG shareholders owning over 45%. The newly formed company shall make Ireland its headquarters. It will be primarily listed on the London Stock Exchange with a secondary listing on Euronext Dublin.
The deal should be complete sometime in 2020.
Meanwhile, regulators in Germany and the UK are enforcing stricter betting rules. Regulations will shortly be imposed in Germany, and this leaves people to wonder how many German states would still allow sports betting to continue.