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UK competition authorities will review the $6 billion mega-merger between FanDuel owner Flutter Entertainment and Fox Bet owner The Stars Group.
The Competition and Markets Authority (CMA) opened the case Tuesday, asking for comments from affected parties.
The CMA said it would examine whether the merger would cause a “substantial lessening of competition.” The watchdog will make an initial decision on the deal by March 31.
Scrutiny of the major merger was widely expected, with a combined Flutter/Stars estimated to have a 40% share of the UK online betting market.
The CMA usually investigates when the combined market share exceeds 25%.
The transaction will have an inevitable knock-on effect in the US, where FanDuel Sportsbook is the early market leader in sports betting in both New Jersey and Pennsylvania. FanDuel needed several months to ramp up but took a commanding edge in New Jersey thanks in part to its retail presence at The Meadowlands.
Fox Bet, too, has been growing its share in recent months. The rebranded BetStars app expanded to NJ and PA sports betting markets in 2019, with plans to go further.
Analysts at Canaccord Genuity previously suggested Flutter could sell off Paddy Power to appease competition rules, but Flutter has played down such concerns.
“We’re very respectful of the competition authorities such as the CMA in the UK,” Flutter CEO Peter Jackson said in October when the deal was first announced. “We look forward to working with them in due course, and we are confident that we will receive the relevant approvals.”
Australian competition authorities could yet review the deal as well.
Julian Easthope, an analyst at Royal Bank of Canada, said he did not expect the CMA review to force any “significant remedies” to the deal.
Flutter’s share price was unmoved by the announcement.