It’s the single biggest acquisition that PokerStars has made since Amaya took over in 2014 and pundits are calling it a pivotal moment for Stars Group CEO Rafi Ashkenazi.
The Sky Betting portfolio includes gambling, sports betting, and poker verticals with a strong integration into the U.K. market. The separate brands include Sky Bet, Sky Vegas, Sky Casino, and Sky Poker.
Sky Poker TV, in particular, played a key role in attracting new players to poker in the U.K. during the mid-2000s.
The Stars Group has allegedly been seeking a large acquisition for several years now. It previously considered a merger with William Hill in 2016.
With the Sky Betting acquisition, the Stars Group becomes the largest publicly listed gaming company based on revenue.
A “Landmark” Moment for Stars Group
The $4.7 billion Sky Betting acquisition is a truly staggering amount considering PokerStars itself was acquired for $4.9 billion in 2014.
To put things in perspective a UK venture capitalist company called CVC purchased Sky Betting for $1.14 million in 2014. That means the company will make out with a profit of approximately $3.7 billion in less than four years time.
“The acquisition of Sky Betting & Gaming is a landmark moment in The Stars Group’s history,” said Rafi Ashkenazi in a statement.
“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.”
Stars Group Targets Growth in Sports Betting, Casino
For the last few years, the Stars Group successfully grew its sports betting and casino businesses. The company wanted to avoid being completely reliant on the main tenant of its business: online poker.
The Sky Betting acquisition seems to be another step in the Stars Group’s attempt to become a worldwide gaming brand rather than simply the world’s biggest online poker operator.
With the deal, the Stars Group get better access to regulated markets like the U.K. It also gets more exposure for sports betting.
Sky Betting is currently home to the largest U.K. player base. It is also a leader in the mobile space. Over 80 percent of its revenues coming from mobile.
The Stars Group already reduced its reliance on online poker to 67 percent based on recently released earnings for 2017. Poker represented 73 percent of the Stars Group’s earnings in 2016. The Sky Betting acquisition will likely drive that number down even further.
Furthermore, Sky Betting’s strong sports betting segment could conceivably represent customer acquisition for PokerStars. After all, crossover players might take a shot at playing cards.
PokerStars, Sky Poker Merge in the Cards?
The emphasis on the deal is on sports betting and casino. However, Sky Betting does have a poker component too. It’s unclear what will happen to the site long term.
For the time being, Ashkenazi mentioned that Sky Betting and PokerStars will remain separate entities. In a year or two, there seems to be a fair chance that the Stars Group will want to share liquidity between the brands, similar to the approach that was used with Full Tilt Poker.
If Sky Poker rolled into PokerStars, that would mean the largest pool of online poker players would get even bigger.
Regardless of how the Sky Betting acquisition plays out, there’s no doubt it comes at a huge cost to the Stars Group. Only time will tell if Ashkenazi’s big bet pays off in the long term.