How will legalized gambling change pro sports?
London (CNN Business)Two of the biggest brands in online betting are getting together as they gear up to take on the growing sports gambling market in the United States.
Flutter Entertainment (PDYPF), which owns Irish gambling firm Paddy Power, is buying The Stars Group (TSG) of Canada, owner of the world’s largest poker site, PokerStars.
The companies said Wednesday that they had agreed an all-share merger to create the world’s biggest online betting and gaming company. At Tuesday’s closing prices the two companies were together worth nearly $12 billion, according to Refinitiv data.
The combined group would have more than 13 million active customers in more than 100 international markets, they said in a presentation to investors.
In addition to Paddy Power, Flutter owns fantasy sports brand FanDuel and Australia’s Sportsbet.
The United States will be a big focus for the new group, after the US Supreme Court last year cleared the way for states to legalize sports betting.
“The opening up of the US sports betting market is perhaps the most exciting development in the industry since the advent of online betting,” Flutter CEO Peter Jackson said on a conference call with analysts.
Eighteen states have since legalized online sports betting with more expected to follow, according to sports media company, The Action Network.
At the same time, regulators in the United Kingdom and Germany are tightening betting rules. Regulations are expected shortly in Germany, raising questions over how many German states would allow betting to continue, Jackson said.
The companies say the global gambling market was worth about $450 billion in 2018, with online betting accounting for about 11%.
“Flutter and TSG are confident that there remains a long runway of growth left for online and mobile gambling,” they added.
The combined group’s annual revenue would have been £3.8 billion ($4.7 billion) in 2018.
The deal will result in Flutter shareholders owning about 55% of the combined entity, with TSG shareholders owning just over 45%. The new company will have its headquarters in Ireland. Its primary listing will be on the London Stock Exchange with a secondary listing on Euronext Dublin.
Correction: An earlier version of this report gave an incorrect number of customers for the combined group.
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