Stars Group Announces £2.5 Billion Buyout of Sky Betting
Stars Group, the Canadian gaming group which owns PokerStars, is buying the UK’s Sky Betting and Gaming (SBG) in a £2.5 billion acquisition. Stars Group Inc said the deal will make it the largest publicly-listed online gaming company.
Though the deal has wider implications, it should increase Stars Group’s profile in the UK significantly. Sky Betting is a multi-million-pound sponsor of the English Premier league.
Rafi Ashkenazi, the CEO of Stars Group, said the SBG buyout is a “landmark moment” for his company, which is based in Montreal. The buyout shows the economic strength of PokerStars, which continues to acquire foreign assets despite several public relations hits for Stars Group since 2014.
Bloomberg Gadfly said the buyout was a boon for Sky Betting & Gaming investors. Chris Hughes of Bloomberg Gadfly wrote, “The house wins. Private equity has hit the jackpot with a deal to sell Sky Betting & Gaming to Canada’s Stars Group Inc. for $4.7 billion. The jaw-dropping returns achieved here are down to a dose of good fortune as much as judgement.”
Stars Group Buys SBG
Mr. Ashkenazi said the deal would complement the PokerStars platform, which controls about 70% of the online poker traffic in the world. Stars Group has purchased various online sportsbooks, daily fantasy sports companies, and casino sites to leverage its brand name to online gamblers. PokerStars can point poker players to its bookmaker sites and DFS sites, while also pointing its sports gaming enthusiasts to its poker rooms. While many gamblers do not cross over into other forms of gambling, many others do.
The Stars Group buyout of Sky Betting is a huge one, so it will take months for the deal to be completed. The Guardian suggested that the deal would be completed later this year.
Rafi Ashkenazi was effusive in his praise of SBG. The Stars Group CEO said, “SBG operates one of the world’s fastest growing sportsbooks and is one of the United Kingdom’s leading gaming providers.”
Stars Group Profile
Stars Group was launched as Amaya Gaming in 2007 in Montreal, Quebec by David Baazov. Through a series of strategic acquisitions, Amaya Gaming became a top international online gaming software company. In 2014, Amaya bought Rational Group for $4.9 billion.
Rational Group was the parent company of PokerStars and FullTilt Poker. Overnight, Amaya Gaming and David Baazov became world-famous power brokers in the global online gaming industry. The PokerStars acquisition proved to be the downfall of David Baazov, though.
Amaya Gaming Troubles
By 2016, Canadian regulators were looking into the Rational Group acquisition for insider trading. It appeared that Baazov and others close to Amaya at the time of the $4.9 billion deal began trading assets on the Toronto Stock Exchange which might have earned them millions of dollars. Eventually, the regulators charged 13 people with insider trading, including David Baazov and his brother.
In the spring of 2016, David Baazov temporarily stepped down as Amaya Gaming CEO. By August 2016, Baazov had left the company entirely and was replaced by Rafi Ashkenazi. The turnover meant those executives who were not involved in the insider trading scandal took over the company. The parent company’s name was changed to Stars Group, to emphasize the PokerStars connection.
Sky Betting and Gaming Profile
Sky Betting & Gaming (SBG) is a British gambling company which is headquartered in Leeds, England. SBG has five brands: Sky Bet, Sky Poker, Sky Bingo, Sky Vegas (online casino), and Sky Casino (premium/live casino).
SBG is 80% owned by CVC Capital Partners, a Luxembourg-based private equity firm founded in 1981 as the European arm of Citicorp Venture Capital. Citicorp spun-out CVC Capital Partners in 1993 and became more prominent in 2006 when it purchased a majority share in Formula One Group. It bought the 80% share of Sky Betting in 2015.
Sky Plc owns the remaining 20% of SBG. Sky Plc was founded by Rupert Murdoch in 1990 and is now controlled by Chairman James Murdoch, CEO Jeremy Darroch, CFO Andrew John Griffith, and Deputy Chairman Martin Gilbert.