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In a deal that has sent shockwaves through the gaming industry, Flutter Entertainment, best known as the owner of the popular daily fantasy site FanDuel, has agreed to purchase the Stars Group for around $6 billion.
The agreement creates the largest betting company in the industry just as sports betting is beginning to flourish in the United States.
Perhaps the most intriguing aspect of the deal is that FanDuel is now linked together with Fox as the media powerhouse owns a minority stake in the Stars Group and just introduced their betting app, Fox Bet, to the market in states like New Jersey.
Flutter Entertainment, based out of Dublin, owns several sportsbook brands in England including the very popular Paddy Power and Betfair. The two brands run betting parlors throughout Britain.
The move by Flutter to purchase the Stars Group follows a trend in the European market, where bookmakers are consolidating to create large companies to best tackle the evolving gaming industry.
The emergence of the betting market in the United States has accelerated consolidation efforts from the largest gaming companies and heavily influenced Flutter’s purchase of the Stars Group.
Other than gaining serious market share, Flutter was most intrigued by the partnership with Fox and its media brand.
In May of this year, Stars Group signed a deal with Fox Sports to offer betting services to customers with a large platform integration element. The partnership brought Fox 5% of the company.
After the agreement between the Stars Group and Fox was announced, the two companies announced the creation of a new betting app called Fox Bet that would offer customers live in-game betting as well as content from Fox’s TV and radio divisions.
For Flutter, the inclusion of Fox’s participation in the deal allows the gaming company to greater power to introduce their offerings to customers in the United States.
Both apps from the two companies will continue to work separately from the other after the merger takes place. Flutter will push both mobile apps into new markets as more states legalize sports betting for residents and travelers.
If there is a difference between the two apps moving forward, Flutter plans to push Fox Bet toward more casual and infrequent bettors who might be more familiar with Fox’s sports media offerings.
For the FanDuel app, Flutter will focus its marketing toward the more serious fan who loves playing daily fantasy and likes to incorporate betting into their viewing experience throughout the season.
The acquisition of the Stars Group will allow Flutter Entertainment access to 24 states through their agreements and licensing deals with gambling operators. These deals include states that have yet to offer legal sports wagering.
FanDuel Chief Executive Matt King believes the move by their parent company creates a gaming powerhouse that will be primed to find success in the burgeoning U.S. market.
“What you have is the full complement of resources and assets as part of that combination,” King said, going “after what we believe will be a material opportunity in the U.S. to play out over the next few years.”
The only step left before the merger becomes official is the approval by stockholders from Flutter and the Stars Group. The vote is expected to happen in the Spring of 2020, with the deal completed by late summer.
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