Flutter Entertainment, TSG Merger to Be Examined by UK’s CMA

As Flutter Entertainment and The Stars Group edge closer to their merger, competition authorities in the United Kingdom have said that they would now want to review the deal and gauge its impact on markets in the country.

Competition and Markets Authority to Review Flutter Entertainment, TSG Merger

Flutter Entertainment, owner of flagship gaming and betting brands as Paddy Power and Betfair, and The Stars Group, the current owner of betting and poker companies Sky Betting and Gaming and PokerStars, are pushing ahead with an anticipated $12.99 billion merger.

Before the deal can be sealed, however, the Competition and Markets Authority (CMA) in the United Kingdom is going to put the transaction to scrutiny. The statement came early on Wednesday and was reported by the Financial Times, which cited the CMA expressing concerns about the deal potentially reducing competition in the country.

To better understand and study the merger, the CMA has invited public opinions, analyses and suggestions by February 18. As most traditional betting companies are shifting their products online amid intensifying regulatory and advertising norms, the CMA wants to gauge the impact that the deal would have on iGaming and betting.

According to experts from Davy, a wealth management company, the CMA’s intervention won’t slow down the completion of the merger which by current time tables should take take place at some point before or duing the third quarter.

How Exposed is the UK Market?

Flutter Entertainment presently controls estimated 40% of the market in the United Kingdom through various subsidiaries when it comes to sports betting. In terms of online gambling, the two brands have a slightly less significant footprint with some 26% of the market.

This is still a significant chunk of the overall market share. Both percentages allow the CMA to conduct a more thorough investigation, however, as the watchdog usually revises deals that exceed the 25%.

When the merger is completed – providing that the CMA doesn’t decide to defer the deal or block it altogether – Flutter’s shareholders should end up with the controlling stake of the company, close to 55% of the total shares.

The Stars Group will claim the remaining shares. The CMA had to step previously in similar big shifts in the gambling market in the United Kingdom when the watchdog ordered Ladbrokes and Gala Coral to dispose of 400 shops before they could push ahead with a $3 billion merger.

The industry as a whole has been pushing ahead with numerous consolidation moves across the entire world. In the United States, the Stars Group has long been trying to gain a foothold through its poker brand. PokerStars has had to take a backseat and tie-up another lucrative partnership with Fox Sports. The pair have created a new media and sports betting entity, Fox Bet.

In the meantime, Australian authorities may also decide to examine the merger between the companies as both entities have a foothold locally.

Image credit: Gov.uk.