PokerStars Joins Betfair, Paddy Power in $6 Billion Deal

PokerStars is no stranger to huge mergers. In 2014, Amaya Gaming famously bought the online poker giant for $4.9 billion. Now, PokerStars and their parent company, The Stars Group (formerly Amaya), are on the move again.

Flutter Entertainment, a massive conglomerate that already owns Betfair, FanDuel, and Paddy Power, is purchasing 54 percent of The Stars Group for $6 billion. Flutter would have a controlling stake in the company if the deal goes through.

This move still requires approval from shareholders in both companies. If completed, the acquisition would place The Stars Group at nearly a $12 billion valuation. This is quite an increase from when Amaya originally bought PokerStars for $4.9b.

When Will This Deal Be Completed?

Flutter and The Stars Group aren’t expecting the share swap to be finished anytime soon. In fact, neither company expects to get shareholders’ approval until Q2 of 2020. Their goal is to finalize the matter by the middle of 2020.

The key holdup is that Flutter and Stars Group must seek approval from regulators in multiple markets. They have several months to receive nods from these regulators and get shareholders’ approval by Q2 of next year.

This Acquisition Is mainly About Sports Betting

The original foundation for The Stars Group lies in online poker. PokerStars has been a globally recognized gaming entity for years.

Times have changed, though, and online poker is no longer as big of a deal as it was 10 years ago. The Stars Group realizes this and has been in the process of dedicating more efforts towards sports betting and casino gambling.

Sports betting is especially important to The Stars Group’s — and now Flutter’s — vision for the company. They want to capitalize on the budding US sports gambling market, which, until now, has been largely untapped.

The Stars Group recently launched a partnership with FOX Sports. The two sides will work on FOX Bet together in the coming months.

Based on the most-recent deal between Flutter and Stars Group, FOX Sports now has an option to buy 18.5 percent worth of FanDuel (owned by Flutter) in 2021. FanDuel has already become a prominent name in the US betting market after launching online sportsbooks in New York, New Jersey, Pennsylvania, and West Virginia.

How Big Is This Deal for Flutter and Stars Group?

Flutter CEO Peter Jackson commented on the growth he expects when/if The Stars Group acquisition is completed. He notes that the two firms combine to serve over 4 million gamblers in 100 markets. Jackson also believes that both FOX Bet and FanDuel will have a better chance at forming deeper roots in the US betting market.

“We are committed to these two, high-quality brands to drive the growth of the Combined Group in the US,” he explained. “The combination will turbocharge our existing four-pillar strategy and provide world-class capabilities across sports betting, gaming, daily fantasy sports, and poker.”

Combined, Flutter Entertainment and The Stars Group earned £3.8 billion ($4.67 billion) in 2018. This amount would’ve made them the world’s largest online gaming and sports betting operator last year. Together, the companies expect to save around £140 million ($172 million) per year as a combined entity.

What Role Will Online Poker Play in This Deal?

Online poker hasn’t been much of a factor in the acquisition between Flutter and The Stars Group. While PokerStars is still the world’s leading online poker site, it doesn’t have as much growth potential as Bet Stars or PokerStars Casino.

Business will continue as usual for PokerStars after the merger. But if The Stars Group has taught us anything, it’s that giant conglomerates are all about profits.

Under The Stars Group, PokerStars has had no problem slashing VIP rewards and raising rake. They no longer see poker players as their core customer group.

Therefore, Stars Group’s focus will likely continue trending towards sports betting and casino games under Flutter.