The UK Competition and Markets Authority (CMA) announced on Tuesday that it has okayed the mega gambling merger of Flutter Entertainment and The Stars Group (TSG).

No threat to competition

According to the CMA, a merger between the two companies “will not worsen the offering to people who choose to bet online.” The positive news helped in pushing the share prices even higher for both companies. The watchdog opened an investigation into the merger in February after announcing it in October last year. It was concerned that by merging the two companies, there will be

“a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”

The watchdog said that it found during the investigation that the merging companies compete with each other very closely. However, the gambling industry does have a number of close competitors and online gambling customers frequently open accounts with them. They also switch between these platforms frequently. It concluded that allowing the merger will not result in the customers receiving less favorable odds. It would also not result in a less generous promotion or create poorer quality products because of the lack of innovation in-app experience or pricing.

Flutter rejoices at the decision

Peter Jackson, the CEO of Flutter Entertainment said that the decision by the watchdog is an important milestone in the merger of the giants. TSG also said that the two firms are working with other regulators whose approval is necessary to ensure their merger is successful. The other bodies include the UK Financial Conduct Authority (FCA). However, Jackson believes that approval from them could be delayed because of the COVID-19 pandemic. The standard operating procedure of the regulator has been affected because of shutdowns.

The merger is yet to pass through the shareholders of both the companies during a scheduled extraordinary general meeting in late-April. However, it is unclear if the meeting will happen as planned because of the ongoing social distancing advisories by the government.

Both companies hope to achieve cost synergies of £140 million if the merger happened as planned during the second quarter. The companies are also trying to create a strong presence in the US, where about two dozen states have legalized sports gambling. The merger could be beneficial in creating a unified strategy for entry in the US and gain even more revenue and users.