Lawyer's Perspective of the Merger Last week, Flutter Entertainment — the parent company of Paddy Power Betfair, Sportsbet and FanDuel — announced its intent to purchase The Stars Group, which owns poker websites PokerStars and Full Tilt, along with the sports betting website BetStars and a joint venture with FOX Sports. The proposed merger of Flutter Entertainment with The Stars Group invites immediate questions under both U.S. and foreign antitrust law as Flutter claims that its FanDuel brand is the “#1 operator in the developing US market,” and thus a merger with The Stars Group figures to only enhance the Flutter’s currently strong market position in the emerging U.S. sports betting market.
Presuming this acquisition ultimately goes through, as more likely than not will be the case (perhaps subject to some required divestitures in foreign markets), the merger of Flutter Entertainment with the Stars Group also seems likely to kick-start a new wave of consolidation within the U.S. online gaming industry – consolidation that seems likely to eventually catch the attention of federal antitrust regulators.
It is not surprising that the U.S. Supreme Court decision in Murphy v. NCAA, which opened the door for states to legalize and regulate sports gambling, is leading to a new wave of industry consolidation as sports gambling companies seek to both gain scale, and partner with traditional U.S. sports media companies. As daily fantasy sports began to raise meaningful private equity funding in the U.S. about five to seven years ago, a similar wave of consolidation ensued. While the daily fantasy sports market initially consisted of many niche players, by 2014, more than 90 percent of the U.S. daily fantasy sports marketplace emerged in the hands of just two companies – FanDuel and DraftKings. And shortly thereafter, even these two companies attempted to merge from a duopoly into a monopoly.
Indeed, even after U.S. regulators turned a blind eye to a series of earlier mergers that consolidated daily fantasy sports marketplace – including even an arguably anti-competitive merger between then No. 2 market player DraftKings and No. 3 DraftStreet – ultimately, in June 2017, the Federal Trade Commission finally took steps to enjoin further DFS consolidation by announcing an intent to challenge the proposed merger between FanDuel and DraftKings that would have created a near monopoly in DFS.