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The mega-merger between Flutter Entertainment and The Stars Group has passed a major competition hurdle.
The UK Competition and Markets Authority (CMA) unconditionally approved the deal on Tuesday, saying the tie-up would not have a negative impact on customers. Its Australian counterpart previously rubber-stamped the merger as well.
The CMA carried out a two-month investigation into the deal, checking whether bettors might face worse odds, reduced innovation or less generous marketing offers.
Specifically, it was looking at the UK sportsbook market where Flutter/Stars brands would include Sky Bet, Betfair and Paddy Power. Together, those account for around 30% of the market.
The CMA’s conclusion?
“Based on the evidence gathered as part of the investigation, the CMA has found that online betting companies compete strongly for customers. There are a number of large and small online sportsbook operators, in addition to the merging companies, with whom customers frequently open accounts and to whom they could easily switch. These companies include the large operators, bet365, GVC/Ladbrokes Coral and William Hill.
The CMA, therefore, found that, while the merging companies compete closely, they are among a number of close competitors, and the merger will not worsen the offering to people who choose to bet online.”
FanDuel has grown from its roots as a fantasy sports company to become the single biggest online sports betting operator in the US. PokerStars, meanwhile, is currently the only online poker site serving Pennsylvania, where business is booming.
The Flutter/Stars tie-up still needs to be approved by shareholders of both companies, who will vote on the transaction on April 21 and 24. It also needs approval from a “small number of other regulatory bodies,” some of which have indicated the COVID-19 crisis might delay their usual timeframes.
The market reaction suggests CMA approval was seen as a major barrier; however, with Flutter’s share price up 10% today.
Flutter CEO Peter Jackson hailed the approval as an “important milestone.”
Jackson will lead the combined group, while former Sky Bet CEO Richard Flint will also sit on the board. Flint brings invaluable knowledge of the Sky Bet model, running a sportsbook alongside a major media partner.
Elsewhere, it was announced last week that Stars CEO Rafi Ashkenazi would not become the COO of the combined firm as previously planned.
The two parties expect the deal to close in Q2 or Q3 of this year.