FanDuel Owner's Deal For Stars Group Has Big Implications
Flutter Entertainment will "buy Canada's Stars Group in an all-share deal that will create the largest online betting operation in the world by revenue," according to Hancock & Massoudi of the FINANCIAL TIMES. The "cross-border deal" creates a company worth about $12.3B with annual combined revenues of $4.675B. The deal also is expected to create $172M per year in "cost synergies" before tax. Stars, which owns PokerStars and Sky Betting & Gaming, in May "announced a partnership with Fox Sports to provide sports betting to the U.S." Flutter, which owns PaddyPower and Betfair, bought FanDuel in '18. As part of the deal, Fox Sports will "have the right to buy" 18% of FanDuel at market value in '21. Meanwhile, Flutter's other U.S. partners "will receive equity in Fox Sports." Talk of consolidation in the gambling industry has "increased in the past year as regulation has become tougher in established markets" like the U.K. and Australia. Another "major driver" is the U.S. lifting the federal ban on sports betting last May (FINANCIAL TIMES, 10/2). The WALL STREET JOURNAL's Ian Walker notes both Flutter and Stars have "expanded tentatively in the U.S." as the sports betting market "cracks open." A merger "could give them the combined firepower to more closely focus on American betters, online poker players and sports fans." This deal "could face significant regulatory scrutiny" (WALL STREET JOURNAL, 10/2).