Future gets brighter still for Canada online gambling firm The Stars Group. Should SkyBet’s rivals be nervous?
As we learned over the weekend, The Stars Group, an online gambling behemoth based in Toronto, Canada, boosted its portfolio with a major acquisition. The company spent a whopping $4.7 billion to acquire UK iGaming giant Sky Betting and Gaming (SBG). So… what happens next?
In February, the company snatched up Australian sports betting operator CrownBet. Immediately after that, it was announced that CrownBet was scooping up the Australian branch of William Hill – another digital sports betting rival in The Land Down Under. And now, Stars Group has one of the UK’s largest iGaming groups, SBG, under its wing.
Clearly, The Stars Group is working to spread its wings all across the globe, in more verticals than ever before. As the owner of PokerStars and Full Tilt, there’s no question that the Canadian company has cornered the global online poker market. Now, they’ve got numerous high-profile sports betting platforms to work with, as well as SkyBet’s propitious online casino systems.
Should SkyBet’s Rivals be Nervous?
Absolutely! Following several years worth of mergers in the iGaming sector, there are only four major operators – “super-groups”, as some analysts are calling them – competing in the UK. They include Bet365, Ladbrokes Coral, Paddy Power-Betfair, and SBG. Analysts don’t anticipate any of those brands crashing in the UK, but some could suffer in burgeoning European markets.
Davy Equity Research Analysts, David Jennings and Joseph Quinn, have been following the developments closely. According to their observations, “This deal is unlikely to change the competitive landscape in the UK in the near-term”. However, they believe that “elsewhere, in less mature international markets, the Stars Group’s overall product offering will now be even more formidable”.
By their assessment, “The battle between the four heavyweights is only just beginning”.
Investors Timid about Paddy Power
Paddy Power-Betfair is boasting a 5% annual revenue increase, putting them just over €1bn. But investors worry iGaming revenues won’t continue to rise in the long-term, and that industry consolidation will wear away the company’s market size.
Merrion Capital Senior Analyst, Darren McKinley, opines that regulatory issues will continue to raise concerns, and weigh on shares, for Paddy Power. He believes their focus on the Australian market, and possible upcoming opportunities in the US, will be “the key to further upside in the medium term”.
Stars Group, on the other hand, is experiencing annual gains of 76%, including a 12% share hike on the Toronto Stock Exchange following the acquisition of SBG. Their company is now valued at $4 billion, with no sign of slowing down.
Stars Eyeing US Online Sports Betting?
Now that the Canada online gambling behemoth has numerous high-quality digital sports betting products in its portfolio – StarsBet, SkyBet, CrownBet, etc. – their ability to move in and dominate a potential US online sports betting market is beyond probable.
Simon Holliday, founder of H2 Gambling Capital, believes “The US sportsbetting Supreme Court case is obviously a big part of the potential upside” for Stars Group’s acquisition of SBG. But their success won’t be reliant upon it. “Even without the US, SBG is just starting to launch in other regulated markets,” says Holliday.
The Stars Group CEO, Rafi Ashkenazi, emphasized a similar standpoint. “Every single new regulated market that opens up, we believe that on a combined basis we will be very strongly positioned to capture a significant market share — the US included,” he said. “But the trigger for this deal was not the US”.
