PokerStars Parent Company Merges With Flutter Entertainment
The online poker world tends to revolve around PokerStars, for good and bad. This time around, PokerStars is in the news for a reason nobody really saw coming. On Wednesday, The Stars Group announced that they have merged with Flutter Entertainment in a deal that will see Flutter become the primary owner of the company.
The deal will be worth around $6 billion in stock with Flutter looking to take advantage of the growing US sports betting market. This will also make it easier for PokerStars and Flutter to expand into the US gambling market in future years.
Flutter Entertainment Merges in All-Stock Transaction
To say that the announcement of this merger was a bit of a surprise is an understatement. According to various reports, Flutter Entertainment will take over The Stars Group in an all-stock transaction where the company will give .2253 shares of Flutter Entertainment stock for every share of The Stars Group.
This will effectively absorb The Stars Group, creating a new online gambling entity. With the deal, Flutter Entertainment gains all of the rights to PokerStars, sky bet, Fox Bet, Bet Easy, and any intellectual property owned by The Stars Group.
The new company will also be absorbing several key members of The Stars Group family. Stars Group Rafi Ashkenazi will become the COO of the new organization. The Board of the new organization will feature a mix of Flutter and Stars Group executives.
Company to Focus on the US Market
Not surprisingly, the new merger was done to try and capitalize on the growing US online gambling market. Presently, there are 13 states that offer legal online sports betting, three that offer online casino gambling, and three that offer online poker.
Other states will be going online in the coming years with sports betting being the primary growth area. Flutter Entertainment CEO Peter Jackson commented on this, stating, “we are ideally positioned to take advantage of the exciting opportunity in the US through a media relationship with FOX Sports as well as our development of US sports betting through Flutter’s FanDuel and TSG’s FOX Bet brands.”
Rafi Ashkenazi also commented, stating, “The combination with Flutter will further enhance our company’s core strengths and position us strongly for the future in this rapidly evolving industry.”
What Impact Will This Have on the US Online Gambling Market?
This deal should be seen as a huge win for the US online gambling market on multiple fronts. Flutter Entertainment owns Paddy Power, one of the oldest online gambling companies in the world. They merged with Betfair back in 2016 and also own the popular fantasy sports site FanDuel.
As online gambling expands throughout the United States, the new company will be better suited to meet the demands of the market than PokerStars was. For starters, they do not have the same baggage as The Stars Group. Flutter can point to the fact they absorbed the company and are not the same entity that violated the UIGEA.
Furthermore, the new company will have greater resources than The Stars Group does to grow with the US online gambling market. They can become a one-stop service provider covering online casino gambling, online sports betting, and online poker in the United States. The company can even handle live retail sales if the need arises.
The main downside to this is that the combined company may cause a problem for some of the smaller entities operating in the United States. FanDuel and PokerStars have already dominated their respective industries in New Jersey and Pennsylvania and with additional resources at their disposal, the new company will be able to secure their spot at the #1 online gambling services provider in the nation.
For now, the red tape for the deal has to be completed. Shareholders of both companies will have to vote on the deal, but there’s little reason to believe that the deal will fail to pass. By Q3 of 2020, we can expect the deal to finalize and for the dominance of the new company to begin.