PokerStars parent company The Stars Group announced Saturday, April 21st that it plans to acquire UK-based Sky Betting & Gaming in a cash and common stock issuance deal valued at $4.7 billion.
The acquisition agreement — which could be finalized as soon as 3Q 2018 — would further diversify The Stars Group’s existing poker, iGaming and sports wagering portfolio as the company seeks to increase its influence within the quickly-growing sports betting market.
The news has spread throughout the gambling industry within a few hours upon being released, as analysts and industry representatives share their views via social media platforms such as Twitter.
Wow, did not see this one coming. Big transaction in world of sports betting / iGaming and amazing exit for CVC. https://t.co/aiKQ6TlCer
— Adam Krejcik (@akrejcik) April 21, 2018
— Kevin Mathers (@Kevmath) April 21, 2018
Crazy. PokerStars was bought for ~$5 Billion dollars by a much smaller company, Amaya, four years ago. Amaya renames to Stars Group and is currently trading at $4.3 Billion after getting down around $2 Billion less than a year ago. Yet it buys another company for $5 Billion. https://t.co/nKNEtu0kP0
— Cal Spears (@CalSpears) April 21, 2018
The Stars Group Seeks to Diversify Gambling Portfolio
In its official April 21st press release, The Stars Group stated that “this combination will result in the world’s largest publicly listed online gaming company.”
The Stars Group — which will acquire SBG subsidiary Sky Poker as a result of the agreement — listed five ways in which it believes the pending transaction will provide benefit to TSG’s global iGaming businesses.
- Increased revenue diversification with more exposure to sports betting
- A larger presence in regulated markets, including the United Kingdom
- The ability to leverage both sports betting and poker as low-cost customer acquisition channels
- Better product and technology offerings combined with Sky Betting’s mobile apps portfolio
- Annual corporate-synergy cost savings of $70 million USD
The Stars Group Further Commits to Regulated Markets
The decision by The Stars Group (formerly known as Amaya Gaming) to acquire Sky Betting is in-line with TSG’s aspirations to seek formal licensure of its entire portfolio of iGaming products.
In a September 2017 Michigan Regulated iGaming hearing before the state’s Regulatory Reform Committee, TSG Head of Responsible Gaming Jeanne David told lawmakers, “We’re the largest gaming site in the world with over 100 million players registered. We went from one license in 14 years to 17.”
(Video Timestamp 1:03-1:33)
“We now have 17 [regulated iGaming] licenses, the [most] recent is Portugal. Our last statistics show that we have 72% of the world’s online poker market and 70% of the online casino market,” added David.
The company’s press release stated Saturday that, “on a pro forma basis to include the anticipated acquisitions of SBG, CrownBet and William Hill Australia, the Company’s 2017 revenue mix by product would have been 37% poker, 34% sportsbook and 26% casino . On the same basis, 75% of The Stars Group’s 2017 revenues would have been generated within locally regulated or taxed markets.”
United States iGaming and Regulatory Measures (Analysis)
The move by The Stars Group comes in the midst of a major shake-up in both the land-based and online gambling industries as legislation to formally authorize real money sports betting gains steam ahead of an upcoming U.S. Supreme Court ruling that could liberate statewide sports wagering markets throughout the country.
And although the latest decision by TSG executives would appear to improve the corporation’s chances of obtaining additional statewide iGaming and/or sports betting licenses in the United States, questions surrounding the cost of such regulation remain.
For example, an all-encompassing Pennsylvania gambling expansion in 2017 will soon open-up the Keystone State online market for consumers, yet it will also place an exorbitant 54% total tax rate on internet slot machine Gross Gaming Revenue while authorizing the construction of Category 4 Casinos.
U.S. statewide gambling regulators’ newfound penchant for extracting maximum value from licensing fees has converted the American market into one of the most difficult jurisdictions for operators to conduct business in — and lays the groundwork for conflicting legislative guidelines for industry representatives and consumers alike to follow.
On top of this, the regulated U.S. iGaming industry faces a potential scenario in which there could be more licenses per vertical than actual states, as proponents in Louisiana seek ways to comply with public referendum mandate requirements by authorizing internet gambling on a parish-by-parish basis.
U.S. iGaming Lobbying Strategy Still Divided (Analysis)
The latest move by The Stars Group is likely to increase the company’s influence upon iGaming lobbyist activities in the country as it continues to maneuver around legislative proposals that include “bad actor” or “suitability” language that could further block its entry into highly populated states such as New York and California.
Many online gambling consumers in the U.S. have communicated that their main priority revolves around simply passing corresponding regulation regardless of which companies are granted or denied access.
But stakeholders have different ideas, and have historically moved to block or at least withhold support for bills if they view the legislation as advantageous to their competitors.
Learn More About The Stars Group Acquisition of Sky Betting
An investor conference call is planned by The Stars Group on Monday, April 23rd at 8:30am Eastern Time. Details on how to join the call are provided in TSG’s official press release here.
Our readers are invited to read and/or participate in those discussions to become more informed on marketplace views and opinions for what has become a quickly-evolving Merger & Acquisition environment for gambling operators.
Read More Gambling News Content from David Huber
New York Online Poker Bill FAQs (Apr 10, 2018)
Penn National Awarded Second PA Mini Casino Location (Apr 4, 2018)
Big Fish Casino Play-Money Games Deemed “Illegal Gambling” (Mar 30, 2018)
FOLLOW US ON TWITTER: @PartTimePoker, @gonzo787, @benefactumgames, @dhubermex