Publish: 30.07.2018

UK Watchdog to Inspect Stars Group & Sky Bet Merger

While this in itself is not necessary illegal, there are a lot of ethical questions about lack of competition in the marketplace that need to be raised

News broke this month that has made a big mark on the Canadian casino world. The Stars Group, one of the leading online gambling and casinos in Canada, acquired UK gambling operator Sky Betting & Gaming. Stars, who are the parent company of PokerStars, sold off C$622 million of stock in order to complete the deal, thought to be worth C$4.7 billion!

The acquisition of Sky Bet for The Stars Group, and has represented, as CEO Rafi Ashkenazi described it, ‘a seminal moment in the company’s evolution.’ However, it seems there have been a few raised eyebrows following the acquisition, and this has led to UK watchdog group Competition and Markets Authority (CMA) to announce an investigation will be launched into the acquisition.

However, it remains unclear the exact reasons for the concerns, as CMA is keeping its card close to its chest in this regard. But, there are suggestions the company could be looking at sections 22 and 33 of the Enterprise Act of 2002, sections which talk about the lessening of market competition. The worry seems to be that this is a merger that is going to create a monopoly in the marketplace.

While this in itself is not necessary illegal, there are a lot of ethical questions about lack of competition in the marketplace that need to be raised. And a non-competitive marketplace is not good for customers, in Canada, or the UK. For now, both companies have been instructed not to take any further action regarding the integration, and it may well be that the CMA could make an unprecedented move to block the partnership. However, attempts to crackdown on Canada’s online gambling hit a snag earlier in the month when Quebec’s Bill 74 was rejected by the Supreme Court.

The acquisition of Sky Bet has seen The Stars Group become the largest online casino operator, an important feather in their cap. But, it could end up with the acquisition being reversed, and this could be a damaging event for the company. Whether or not the CMA decides to follow through with their probe, or to take any action after the fact, remains to be seen. But, it is clear that these are trying times for The Stars Group and Sky Bet.

It seems likely that the investigation has been triggered as a result of complaints from fearful competitors concerned about the impact on the market. So, this should be taken with a pinch of salt, and it may well be the case that it winds up coming to nothing. It is now just a case of waiting to see how the CMA chooses to proceed. The ball is in their court now.

 

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