The UK’s competition watchdog is reviewing the proposed union of online gambling companies Flutter Entertainment and The Stars Group (TSG).
On Wednesday, the UK’s Competition and Markets Authority (CMA) announced an investigation into the proposed deal to merge the operations of Flutter and TSG. The merger, which was initially announced in October 2019, would create a gambling monopoly with estimated yearly revenue of approximately £4 billion and a valuation of about £10 billion.
Given the firms’ merged operations would control an estimated 40% of the UK’s online sports betting activity and about 1/4 of the UK’s overall online gambling market, the CMA believes a keener inspection of the agreement is guaranteed to ensure it won’t lead to
“a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”
On Tuesday, the CMA told both firms of its decision and is now soliciting public remarks on the proposed merger until 18th February. The CMA intends to give a ‘phase 1 decision’ on its discoveries by 31st March, long before the two firms expect their deal to close by the second or third quarter of this year.
Shareholders of both companies reacted with half-hearted disinterest to the CMA’s announcement, with little movement in either firm’s shares on their respective exchanges.
TSG has been down this route before after the company’s $4.7 billion acquisition of UK gaming operator Sky Betting & Gaming in April 2018. The CMA previously ordered a freeze on the two companies’ integration process but eventually approved the acquisition that October.
A similar regulatory investigation may be upcoming in Australia, where Flutter and TSG Group have a large presence through their Sportsbet and BetEasy businesses, which together control about 1/4 of the local online betting niche. The Australian Competition and Consumer Commission has yet to show whether it’s assessing the merger.