Flutter Entertainment has joined forces with the Stars Group, resulting in a shift of all its sports wagering brands to the Paddy Power Betfair platform. They intend to pour significant resources into PokerStars in the coming years.
The amalgamation was finalized on the fifth of May, and Flutter now controls brands such as Sky Bet, Sky Vegas, and PokerStars.
Flutter asserts that the merger has bolstered their technological capabilities and they are dedicated to crafting fresh offerings while prioritizing customer security.
Since the combination, Flutter has opted to operate with a decentralized structure, featuring four regional teams backed by a central unit.
This merger will bring together Sky Betting and Gaming, Paddy Power, and Betfair into a UK and Ireland division. Meanwhile, PokerStars, Betfair International, Adjarabet, and B2B risk and trading operations will be combined into an international division.
Australia, including BetEasy and Sportsbet, will remain a separate division. The US division will merge FanDuel, Fox Bet, TVG, and PokerStars’ US operations. Four division CEOs have been appointed, although their names have not been made public. Key leadership roles have been filled, and financial performance will be broken down by these divisions starting in 2021.
In the meantime, technology integration will focus on safeguarding the future growth of each division. After assessing viable options, Flutter determined that the business would benefit most from using Paddy Power Betfair’s online sports betting platform as its global platform.
This will result in FanDuel transitioning to this solution, which includes proprietary technology and SG Digital’s OpenBet.
This means that the Fox Bet and BetStars sports betting websites, operated by The Stars Group, which have been powered by Amelco since 2015, will transition to this platform. FanDuel will migrate from GAN and International Game Technology. FanDuel’s agreement with IGT was extended earlier this month to cover all regulated US states.
The integration of Flutter’s business in Australia is at the forefront, with the firm opting for a single-brand approach. This signifies that BetEasy patrons are transitioning to Sportsbet.
The enterprise stated, “We are meticulously examining our brand, product, and technological blueprints in other global regions. Upon completion, we will swiftly implement them, mirroring our Australian strategy.”
Flutter is also striving to enhance and sustain its operations.
Flutter declared, “Upon announcing the merger, we pledged to assess the regulations and hazards of the consolidated entity post-transaction. Should the rules diverge from Flutter’s, we will adopt the more stringent ones.”
This evaluation is segmented into two primary components: scrutinizing the Stars Group’s management of responsible gambling and the prevention of money laundering, and examining the legal, regulatory, and fiscal risks in each nation. The review is ongoing, but Flutter has already identified avenues for improvement.
This has prompted Flutter to implement more robust regulations across all of Stars’ brands. They have also ceased utilizing certain brands in specific countries where they had previously decided to withdraw. The company indicated that these adjustments will diminish their annual revenue by approximately £65 million.
Looking forward, Flutter will concentrate on investing in PokerStars.
Prior to the merger with Stars, Flutter held the belief that the company’s substantial profit margins were, at least in part, a consequence of insufficient investment. Following a more comprehensive understanding of the business after the acquisition, Flutter has now pinpointed three key areas where additional investment will lead to increased sales and marketing expenditures.
As a proportion of Stars’ revenue, this amounted to only 14% in 2019, in contrast to an industry standard of approximately 25%, and casino revenue growth was entirely fueled by poker cross-selling.
Promotional initiatives, such as complimentary bets, could also see an increase, after these incentives had been scaled back over the preceding five years. While Flutter acknowledged that this was undertaken to concentrate on customers enhancing its poker ecosystem liquidity, it stated that it would strive to achieve a balance between effective promotions that can stimulate sustainable customer growth.
Lastly, Flutter declared that it would endeavor to revamp PokerStars’ product, technology, and customer experience.
“It is evident that the PokerStars product is trailing behind rivals in customer perception across numerous regions, and we have a significant amount of work to undertake,” the operator clarified. “We are exploring methods to expedite development efforts that can propel product and operational enhancements to address these shortcomings and cultivate greater adaptability within the technology infrastructure.”
Sporting wagering offerings also require modernization, the firm stated, which will be addressed by switching to the Paddy Power Betfair platform.
The enterprise might also pursue additional mergers and acquisitions in the future, as long as these ventures “further enhance the Group’s growth trajectory and diversification.”
“Considering our robust presence in key markets such as the UK, Ireland and Australia, these transactions are more likely to be driven by our international division,” the company added.
This strategic update was released alongside the operator’s first-half 2020 results, which revealed reported revenue increased by 49% year-over-year to £1.52 billion, with business expansion and diversification mitigating the impact of the novel coronavirus (Covid-19).
Image: Flutter Entertainment
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