TMCnet Feature
September 09, 2020

Tracking this Year's Mergers and Acquisitions as the USA Regulates Online Gambling



The global gambling industry is growing at a rapid pace but so is the competition. It is getting harder for land based gaming operators and iGaming operators to succeed as they face multiple challenges.

Licensed gambling operators have to deal with gaming legislation, market competition, advertising regulations, advanced software technology, unlicensed operators, anti-gambling opponents, money laundering and cyberattacks.

The trend in the last decade is for the top gambling operators in the world to merge operations and create a market force that is able to wipe out most of the smaller operators and have complete market dominance.

Some of those top mergers in recent years include Ladbrokes merging with Gala Coral in 2016 to create Ladbrokes Coral; Betfair merging Paddy Power to create Flutter Entertainment in 2016,  Tabcorp merging with rival Tatts Group in 2017, FanDuel getting acquired in 2018 by Paddy Power Betfair and Mr. Green being acquired by William Hill in 2019.



The Stars Group and Flutter Entertainment Merger

One of the biggest mergers to take place in 2020 is the merger between Canadian based The Stars Group and Flutter Entertainment. The two gambling powerhouses started talks in late 2019 and things proceeded rather quickly and flawless that resulted in a successful merger in May 2020. The merger has created one of the biggest gambling powerhouses in the world.

          Mega Merger

Flutter Entertainment is the parent company of some of the biggest gambling brands in the world. Some of these brands include Betfair, Sportsbet, FOX bet, FanDuel, Adjarabet and Paddy Power. The Stars Group (TSG) is the parent company of PokerStars – the biggest online poker website in the world. Some of the other brands owned by TSG include PokerStars, PokerStars Casino, PokerStars LIVE and BetStars.

The combined annual revenue for the new company is expected to be over $4.7 billion. The newly formed enterprise will focus on a number of new aspects which include using innovative technology and artificial intelligence (A.I), entering new markets, looking to dominate the U.S sports betting market. PokerStars will focus on moving away from being known as the number one poker website in the world and will look to transform the brand image into one of the world’s leading entertainment portals.

U.S Sports Betting Market – Major Focus

The sports betting market in the United States has grown rapidly since the Supreme Court ruled against the Professional and Amateur Sports Protection Act (PASPA) of 1992 which was the law that banned sports betting in America. Once PASPA was repealed, individual states started debating whether they should legalize sports betting or not.

Since May 2018, as many as 18 states have legalized sports betting and launched sports betting operators. Another 5 states have passed legislation approving sports betting but they are yet to get their sports betting markets up and running. The COVID-19 situation is one of the main reasons why things have slowed down as global sports came to a halt and the main focus for governments around the world has been to get COVID-19 under control and then resume business operations and daily life.

Betfair which is part of the Flutter Group is taking aim at the US market. Befair which has a strong presence outside the US is staking its claim and will look to enter as many states as possible in the near future and establish itself as one of the biggest sports betting operators in the United States.

Caesars Entertainment and Eldorado Merge In 2020

The biggest merger in 2020 will most likely end up being the merger between Caesars Entertainment Corp. and Eldorado Resorts Inc. There were many hurdles that needed to be addressed for this merger to be completed but both sides were committed to the deal. The $17.3 billion merger was finally completed in July 2020 which created the biggest casino company in the United States.

The newly formed company retains the Caesars name and now has gaming operations in 16 states across America including New Jersey, Nevada, Louisiana and Colorado. Caesars owns a total of 55 casinos which are spread across the United States as well as in international locations.

Market regulators in the past have been reluctant to approve major mergers and acquisitions due to the fact that massive mergers often create a monopoly on the market and can wipe out some of the smaller operators. However in recent years, there has been a lot more leniency when it comes to such massive mergers.

Smaller Operators Must Innovate or Merge

COVID-19 has wiped out a number of smaller operators in 2020. Smaller land based casino operators and iGaming operators will struggle to compete with these global gaming powerhouses who have much more established brands and bigger budgets. The only way for smaller operators to continue to survive in the ever competitive gambling industry is to innovative and create brand loyalty or to sell-out to the bigger gaming houses.

One of the best ways to innovative is to use gaming technology to stand out from the competition. This is not going to be easy to do as top quality gaming software does involve big budgets. Players from all over the world want the very best in gaming software, user technology and customer engagement programs to stay loyal to the brand.

It will be interesting to see what mergers and acquisitions take place in the coming years as one can expect many of the smaller gaming brands to go out of business or be swallowed up by bigger operators who will find it easy to get new customers by buying up their competition.  



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