UK`s Competition & Markets Authority Starts Investigating the Flutter Entertainment & TSG Merger

UK's CMA investigating Flutter & TSG merger
  • Profile picture
  • Namita Ghosh February 6, 2020
  • 2 Minutes Read

It was last October when two of the world’s biggest gaming firms, Flutter Entertainment and The Stars Group (TSG), announced that they would be merging together in an all-share deal. The merger would create the world’s largest online gaming company with an approximate value of over £10 Billion. According to specific market experts, the combined business would have annual revenue of £3.8 Billion.

While the resultant company would have access to almost 100 international markets across gaming verticals like online poker, casino, and sports betting, it would enjoy a dominating presence in the online gambling market in the UK.

UK’s regulatory watchdog, the UK Competition and Markets Authority (CMA), is obviously concerned and recently announced that it is investigating the merger. CMA primarily ensures that a healthy and competitive environment is maintained in all online businesses in the UK. The CMA has to ascertain whether the Flutter & TSG merger would substantially reduce the competition in the gambling industry in the UK.

The first phase of the investigation is currently underway, and a decision is expected by March 31. This will help the CMA decide whether or not to refer the merger to a more in-depth, ‘Phase 2’ investigation.

 

The CMA Investigation – Possible Fallout

TSG and Flutter Entertainment have been aiming to complete the merger by the second or third quarter of 2020. Flutter Entertainment already has big gambling brands like Paddy Power, FanDuel, and BetFair in its portfolio, while the TSG owns Sky Bet, PokerStars, Full Tilt, and Oddschecker. The deal would see Flutter shareholders own 54.6% share in the resultant company that would be headquartered in Dublin, Ireland, and listed on the Irish and London stock exchanges. TSG shareholders would own 45.36% in the merged company.

The company still has to take the approval of both the Flutter and TSG shareholders. According to industry experts, if the merger pulls through, the resultant company would control 26% of the overall gambling market in Europe.

What concerns CMA is that the merged company could enjoy nearly 40% of the market share in the UK’s online sporting betting sector. The CMA usually caps the competition threshold at 25% in considering the market impact of potential mergers. The CMA has the reputation of turning down possible mergers at the last minute. In 2016, the CMA, while investigating the merger between Gala Coral and Ladbrokes, had asked both companies to sell 400 betting shops before getting approval for the deal.

The CMA gives a strong impetus to promoting competition in the online market. While we can only wait and watch, clearly, the Flutter Entertainment & TSG merger is not a done deal yet.

0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments

Top Online Poker Rooms

Top
PokerGuru