The proposed £10bn merger between Leeds-based Sky Betting & Gaming’s owner The Stars Group and Paddy Power owner Flutter Entertainment is being probed by the UK competition watchdog.
The Competition and Markets Authority (CMA) said it will investigate whether the deal would result in a “substantial lessening of competition” in the UK gambling sector.
Flutter, which also owns Betfair, announced the tie-up with Canadian rival The Stars Group in October in a deal that would create the world’s largest online betting firm with combined annual revenues of £3.8bn.
The CMA is asking for views on the deal, with a deadline of February 18.
It comes after the competition regulator put the brakes on Takeaway.com’s plan to buy Just Eat in a last-minute intervention late last week, forcing the two firms to review the timetable for the £6bn deal.
Under terms of The Stars Group (TSG) merger, Flutter - previously called Paddy Power Betfair - will own 54.6 per cent of the combined firm, which will have its headquarters in Dublin and be listed on the London Stock Exchange as well as on Euronext Dublin.
Following the transaction, Flutter said it will have customers in more than 100 international markets and will gain TSG’s well-known brands PokerStars and Sky Betting & Gaming.
The tie-up - set to be completed through a takeover of TSG by Flutter - will allow the two firms to make savings of £140m a year, while there will also be potential revenue cross-sell in international markets and lower finance costs.
If the deal goes ahead, there will be nine non-executive directors comprising five nominated by Flutter, three nominated by TSG and the appointment of Richard Flint, the former CEO of Sky Bet.
Sky Bet has around 1,500 staff based in Yorkshire and is continuing to grow its headcount. In 2018, the business was acquired by Stars for £3.4bn.
The deal follows a partnership announced in May between TSG and Fox Sports to provide sports betting to the US, while Flutter is already targeting America after buying US fantasy sports betting site FanDuel last year.
It comes during a period of unprecedented change in the global betting industry, which has seen a raft of deals in recent years amid the rise in online gaming and regulation crackdowns.