- Flutter and The Stars Group will go through with a planned merger on Tuesday, May 5, 2020.
- The two companies own major gambling and sports betting products like FanDuel, Betfair, FOX Bet, and PokerStars.
- The newly merged company will split operations into four geographically based segments, in the US, UK, and Australia, as well as a general international segment.
- A merger between two huge companies like this will have a negative impact on industry competition and consumer choice.
TORONTO – Flutter and The Stars Group (TSG), two of the biggest gambling firms in the world, are still set to go through with a merger scheduled for May 5, 2020.
This merger was announced last year and will proceed as planned despite difficulties facing the gambling industry.
Both Flutter and TSG are large conglomerates that encompass multiple popular betting brands.
Flutter was created in a merger of Betfair and Paddy Power, while TSG was associated with PokerStars going public and has since absorbed Sky Betting and Gaming, a UK-based company.
Although the gambling industry is facing significant challenges right now as a result of the Coronavirus pandemic, shareholders voted last week to go through with the planned merger.
This merger is a big win for both companies but could restrict choice for consumers of legal sports betting.
Segmented Regional Business Strategy for Flutter/TSG
Since 2018, Flutter has employed a highly segmented and decentralized “federal operating model.” This model breaks down the business into distinct geographical regions rather than individual brands or departments.
TSG will have to alter its existing corporate structure to fit this model. PokerStars, TSG’s flagship brand, will remain its own entity, although its U.S. and international operations will be separated.
Other brands owned by TSG will be reassigned to one of Flutter’s five distinct segments, and once the merger is completed, the two companies will begin to further restructure their operating model to maximize efficiency.
Flutter has announced that its five segmented model will be temporary. Once the merger is complete assets will be reshuffled from the five existing segments into four new ones entirely based on geography.
Different segments will be consolidated or reshuffled to create a new operating structure that fits into a simple geographical mode. The final structure should look something like this:
- Australia – Sportsbet, BetEasy
- International – PokerStars non-US sites, Betfair, miscellaneous business operations
- US – FanDuel, FOX Bet, PokerStars US
- UK/Ireland – Sky Betting and Gaming, Paddy Power
Impact On U.S. Sports Betting Market
There could be some short-term complications with all the corporate restructuring, but both Flutter and TSG will heavily emphasize maintaining a degree of normalcy with their subsidiaries and associated brands.
FOX Bet, FanDuel and other major sports betting brands under this new merger should continue to operate as normal. If consumers were completely unaware that any merger had occurred, Flutter and TSG would both likely consider that a job well done.
What Does This Mean For Bettors?
This merger could have unfortunate competitive effects. With two major competitors merging into one, that removes nearly all the incentive for the two companies to compete with each other.
Sports betting is a highly competitive market, and the power of consumers to choose between different brands is one of the biggest motivators for companies to innovate and compete to offer the best prices and highest quality products.
There is some value in putting different gambling products that are typically segmented in the U.S., like sports betting and online poker, under the same umbrella. Unfortunately, any benefit might be tampered by the negative competitive effects of the merger.
News tags: Australia | BetEasy | Betfair | Coronavirus | COVID-19 | FanDuel | Flutter | FOX Bet | Paddy Power | PokerStars | Sky Betting and Gaming | Sportsbet | The Stars Group | United Kingdom | United States
With a dual background in English and sports performance and business analytics, Carter aims to write stories that both engage and inform the reader. He prides himself on his ability to interweave empirical data and traditional narrative storytelling. When he isn’t keeping readers up to date on the latest sports betting legal news, he’s banging his head against a wall regretting his decision to be a Tampa Bay Buccaneers fan.