Mergers, sports betting and the future of online gambling

The COVID-19 pandemic has had a drastic impact on online gambling and casinos. Most of the changes in the industry have been good as users and revenue have increased. Sports betting has almost died out because of the closure of sporting events. Due to this, eSports has started to take its place.

Taking a more corporate view of the effects of the pandemic, credit analysts are predicting that COVID-19 will spark a rise in mergers between big-name gambling businesses.

One example is the merger of Paddy Power’s owner Flutter Entertainment with Stars Group, based in Toronto. This week shareholders in Paddy Power backed the proposed merger with Stars. This will result in a global gaming giant with more than 10 million customers. 

Analysts from Moody’s Florent Egonneau and Jeanine Arnold say that this consolidation is likely to continue gaining traction, even as the pandemic subsides. Online casinos and the companies behind them will look to increase their reach and strengthen their businesses.

Devaluation will encourage market share grabs

Ron Mendelson, Director of Fast Offshore has worked in the iGaming market for over 22 years. He believes that bigger firms will want to leverage depressed valuations. “This will encourage those with the means to increase their share of the market through takeovers”, he said.

In terms of sports betting, turnover is down big time. Sporting events have been cancelled or postponed indefinitely and most punters have moved onto other things. It isn’t known how many punters will return to sports betting when games restart, or if they will prefer their new ways of betting.

Despite this downturn and future uncertainty, Flutter and Stars will proceed with the deal. Moody’s said Stars Group is a high credit risk with around EUR 4 billion in net debt. Stars own Skybet, Poker Stars and Full Tilt Poker amongst others.

Flutter, on the other hand, has no significant liabilities with net debt of just EUR 270 million. The company also owns Fanduel in the US, Sportsbet in Australia, and Betfair. 

Analysts have said that EU operators including Cirsa, Codere, Sociedad, and Tackle Group could survive a two-month lockdown. If the situation persists, they could run into difficulty.

A switch from sports betting to other gambling

GVC, owner of Ladbrokes, has seen a vast number of its clients switching from betting to online poker and casino.

Mendelson said: “This was to be expected. People will not stop gambling, they will just look for other ways to do it. Savvy operators are looking for ways to provide new products that’ll keep bettors’ interests even when sports betting starts up again.”

“One such example is eSports. We’ve noticed a sharp increase in the number of enquiries from our clients looking to start up eSports betting in Curacao or Malta. We are helping our clients expand their portfolio of products to reflect the changing demands of the market.”

In terms of mergers, Mendelson adds that those who are not able to keep up with the pace or have not moved quickly to transition to a new way of working will struggle to survive.

“We have twenty years of experience in this sector and we have seen many changes. Those who are a step ahead of the game stay afloat. We are ready to help those that want to strive for success in these challenging times,” he said.