Shockwaves were sent rolling through the gambling industry today as The Stars Group, who own PokerStars, announced a merger with Flutter Entertainment, formerly known as Paddy Power Betfair. The two huge gambling companies struck a near $12 billion deal which gave Flutter 55% of the shares for the new merged company, while The Stars Group got 45%.
The deal and its implications
The announced deal will see shares exchanged between the two companies as they merge to become one entity. The new combined company will boast $4.7 billion in annual revenue and a customer base of 4 million going by figures from last year. This will make it the largest online betting company in the world.
The deal should generate $170 million of savings before tax for the new company and could allow the expansion of fantasy sports betting which Flutter Entertainment already have a strong vested interest in. The value of shares in the two companies spiked as soon as the announcement was made and should continue to strengthen in the months to come.
For poker players on Stars or Paddy Power Poker, there won’t be any immediate changes. Although, the companies were individually shifting their focus more towards casino games and sports betting even before the merger. That process could now accelerate which isn’t a great omen for the future of online poker.
It does bode well for other gambling types however, with Stars having already struck a deal with Fox Sports in May which will help it to access the US market for sports betting. Fox Sports also has an option in place to take up an 18.5% share in Fan Duel, which is a fantasy sports betting website owned by Flutter Entertainment.
The end of an era?
Not so long ago, PokerStars was a family run business which revolved entirely around online poker, taking care of all its customers and providing great value for money.
Since PokerStars has been taken over however there have been rake squeezes, VIP cuts and the introduction of casino and sports betting on the site. These have now become the priority of the company, with poker being an afterthought.
This latest announcement marks the latest step in The Stars Group pushing its gambling services internationally and trying to strengthen its ties with the US market. It is also a step away from online poker and towards sports and casino-based betting.
It would not be a surprise to see online poker offerings reduced or even removed in the future if The Stars Group no longer sees it as a viable use of resources.
Microgaming Poker Network recently announced the planned closure of its poker network next year for precisely those reasons.
Article by Craig Bradshaw