Sep 28, 2020, 2:38 pm1.1k pts
The gambling industry functions just like any regular industry. It has the bigger honchos who make the rules and a bunch of smaller companies that follow suit while trying to take a bite out of the pie. Similarly, the larger firms are at loggerheads, trying to maximize revenue while smaller firms are constantly looking to create new opportunities for customers. Sometimes when these out-of-the-box ideas work, bigger companies acquire smaller firms in the hope of utilizing the newfound opportunity. Thus, leading to mergers and acquisitions.
Why the Sudden Spike in Mergers?
Bookmakers have been coexisting peacefully for ages without the need for big acquisitions. What suddenly changed? Although there are multiple reasons that slowly lead to bookies joining forces, the one factor that stands out like a sore thumb is online gambling. The sudden explosion of online betting since 2010 revolutionized the age-old gambling industry.
Posting $5.6 billion in total revenue during its initial year, the revenue quickly climbed to $7 billion within just four years. These numbers explicitly portray the impact of online gambling on the industry. And if that wasn't enough, the authorities decided to increase gaming duties on physical gaming machines, leading to a further drop in revenue.
It's not very difficult to see the reasons behind sportsbooks teaming up to tackle the situation. While sometimes, mergers result in both companies maintaining an individual presence. At other times the slate is wiped clean.
Top Mergers in the History of Gambling
1.Betfair and Paddy Power – One of the biggest mergers in recent history, Paddy Power, was formed when David Power, John Corcoran, and Stewart Kenny decided to combine their existing businesses and rebrand. Betfair, on the other hand, was the quintessential example of the modern-day bookmaker.
By teaming up, Paddy Power gained access to Betfair's online expertise while the latter made the best use of Paddy Power's physical establishments throughout Europe. This is a prime example of two major bookies making use of each other's establishments.
2.Betfred and The Tote – Betfred's takeover of The Tote from the government was undoubtedly one of the largest mergers in the history of gambling. The Tote was formed by the UK Government in 1928 to earn revenue from the thriving Equestrian wagering scene.
The deal in 2011 was marred by controversy as many within the industry felt Betfred lacked the best interests of the horse racing industry. In fact, the management was more intent on capitalizing on The Tote's numerous physical shops in the UK. Betfred's co-owner Fred Done had previously expressed his displeasure of how the Equestrian operations were run and threatened to revoke existing sponsorships, which was a leading concern for industry stalwarts once the deal was finalized.
Other notable mergers include Ladbrokes and Coral joining hands and GVC's final takeover of the brand. Star Sport's acquisition of BetVictor is equally famous. If you're interested in this story and would like to read more, visit PA Punter.