The Stars Group continued the company’s pivot away from poker this week, purchasing U.K. bookmaker Sky Betting & Gaming in a deal valued at $4.7 billion.
In a press release issued on April 21, The Stars Group – formerly Amaya, and PokerStars’ parent company since 2014 – announced the terms of the acquisition, which centers around the online sports betting site SkyBet.
Per the statement, Stars Group paid $3.6 billion in cash as part of the takeover, with the remaining $1.1 billion accounted for by newly-issued common shares of company stock.
Rafi Ashkenazi, who serves as chief executive officer for the Canadian-based Stars Group, praised the deal as a major milestone in the company’s history:
“The acquisition of Sky Betting & Gaming is a landmark moment in The Stars Group’s history.
SBG operates one of the world’s fastest growing sportsbooks and is one of the United Kingdom’s leading gaming providers. SBG’s premier sports betting product is the ideal complement to our industry-leading poker platform.
The ability to offer two low-cost acquisition channels of this magnitude provides The Stars Group with great growth potential and will significantly increase our ability to create winning moments for our customers.
Following this transaction, The Stars Group will have significantly enhanced scale and a highly-regarded global brand portfolio. As a result, we are well positioned to realize our vision of becoming the world’s favorite iGaming destination.”
His counterpart at Sky Betting & Gaming, Richard Flint, expressed excitement at SkyBet’s expected international expansion:
“We are delighted to join forces with The Stars Group.
We have had a fantastic last few years and would like to thank CVC and Sky for supporting us in becoming a leading online operator in the UK.
This transaction allows us to offer our best-in-class products to a truly global audience. We’re excited about our future together.”
The multibillion dollar move aligns with Ashkenazi’s ongoing effort to transform The Stars Group into a comprehensive iGaming platform, rather than a poker-centric product. Under his leadership, the company launched a StarsBet sportsbook vertical, while PokerStars has diversified its offerings to include casino games and lottery-style poker offshoots.
Alun Bowden, senior consultant for Eilers & Krejcik Gaming, spoke to Online Poker Report after the news broke to discuss SkyBet’s implications for The Stars Group:
“SBG is one of the most attractive assets in the sector right now and the deal is genuinely transformational for Stars Group and gives it immediate scale and expertise in sports betting as well as adding a large chunk of revenues to its casino business.
SBG has around 12 percent of market share in the UK and the deal will make the combined group one of the largest operators in the UK market alongside Paddy Power Betfair and GVC.”
Per the press release, when combined with recent acquisitions of CrownBet and William Hill Australia, absorbing SkyBet significantly alters The Stars Group balance sheet. Using a pro forma basis to account for the three acquisitions, just 37 percent of the company’s revenue in 2017 would have derived from poker.
The sportsbook vertical, however, would’ve generated 34 percent of last year’s revenue.
When combined with the 26 percent resulting from casino games, The Stars Group is on track to consider poker a plurality, rather than a majority, of its business.