How The Paddy Power Betfair Merger Could Affect The Industry


paddy power betfair william hillThe news of the Paddy Power/Betfair merger, aptly named Paddy Power Betfair, was big news this week. We've already reported on it and the ways it may affect you, the consumer. But for the industry as a whole this could cause a real shake up. Paddy Power and Betfair have a lot of sway in the industry by themselves, but with the recent merger, that threat has just doubled. Surely, the rest of the industry is starting to get really worried, so we take a look at how it could affect the remote gambling industry.

Overview Sections

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What Is Paddy Power Betfair?

Paddy Power Betfair is an agreed merger between Paddy Power and Betfair. One of the more intimidating factors of the partnership is the very different types of market that each company controls.

Betfair is already a huge presence in terms of online gambling, with their entire business focused on direct online betting between users. On the other hand, Paddy Power has a huge share of the high street betting market which totals 600 betting shops, half of which are in the UK. These shop totals are included in the merger deal.

The companies have described the deal as “compelling strategic logic” and that “the scale and capability is unsurpassed” with regards to furthering their expanse into other territories.

The Numbers Game

The hopes of the merger are only one piece of the plan. Paddy Power Betfair want to expand into territories within Europe and further afield, such as Australia and The United States. Those kind of aspirations are intimidating by themselves, but don't get any more soothing when you take the numbers into account.

Paddy Ladbrokes Coral MergerPower Betfair have a 16% market share straight out of the gate. This beats every other competitor by several milestones. The next largest competitor is another huge merger from last year between Ladbrokes and Coral, whose merger drove them up to 14% market share. Even the merger between two other industry giants, William Hill and Bet 365 couldn't come close to toppling Paddy Power Betfair.

On top of this, Paddy Power Betfair have expected annual revenues of £1.1 billion from the offset.  They have a lot of money to play with and a lot of places to play it.

Safety In Numbers

As we mentioned above, there are a lot of large scale mergers going on as of late. Ladbrokes and Coral recently sealed a £2.3 billion merger. William Hill and Bet 365 recently joined forces also. In July, a very large battle took place over the the takeover of ‘Bwin.Party'. GVC Holdings, who own Sportingbet, went against 888 to purchase the company, but eventually 888 won out in a cash and stock deal that was valued at £898 million.

Reasons For Increase In Mergers

  • Taxes and regulations levied against gambling in recent years makes operating alone very expensive.
  • The shift to online gambling has left a lot of high street gambling based businesses at a loss.
  • A single merger between companies forces everyone else to merge in order to remain competitive.

Because of the expanding possibility in the gambling market place, mergers have become a beneficial way to enter segments oladbrokes 888 gamblingf the industry without the trouble of having to establish yourself. As soon as one single merger occurs, it forces other companies to have to merger as well, since two companies working together greatly increases their market share.

The Benefits Of A Merger

  • Mergers have allowed for multiple companies to lessen the brunt of increased taxes.
  • Mergers have allowed for companies to cheaply increase their variety, by absorbing companies which are already successful in another branch of the industry (e.g online).
  • Mergers allow for companies to create market share across territories.

The rise of internet gambling and increasing markets abroad have caused a lot of problems for companies, many of which are problems that mergers solve. It has caused an Adapt or Die mentality for gambling companies, who need to band together to outdo one another.

So Paddy Power Betfair is more of a symptom of the industry than the cause of the problem. However, this doesn't mean they're not going to be a problem for everyone in the future.

PPB Is The Perfect Merger

All of the above reasons Betfair Paddy Power mergerwhy a merger is beneficial are symbolised by the Paddy Power Betfair relationship.

Paddy Power owns the storefront and Betfair owns the online market. Paddy Power has a lot of sway within the UK and Betfair is able to have connections outside of the UK due to it being online.

Paddy Power and Betfair are giants in their own segment of the industry. They both control a majority of their own segment in the industry and now they've joined forces.

This is the gambling equivalent of Coke and Pepsi joining forces in the soda market. It's not an unusual move for companies to do and usually this wouldn't be a big deal for the industry. But simply due to how powerful these companies were alone, it will force a lot of hands to be played in order to match them.

The Triple Threat

With the example of Ladbrokes and Coral, it's likely that if no other two major companies can create a merger close to what Paddy Power Betfair have accomplished, then it's likely the numbers will have to keep growing. We'll probably start to see a lot more takeovers in the coming years, with online or store front betting companies buying out multiple competitors in their complimentary market.

There may even well be mergers between more than two companies, to force their market share to tower over Paddy Power Betfair. A merger in the current market is only beneficial at this point, with the philosophy of the more the merrier never ringing more true.

Panic Mode

Paddy Power Betfair has put a few key players in the industry into panic mode. With the recent shift of mergers and takeovers that have been happening, it's not surprising to expect this recent huge merger to push that into overdrive.

Expect a lot of big shifts and expansions in the industry within the coming months. As far as the future goes, it'l be interesting to see what the next big coupling is and what it brings to the table.

About Harvey

Harvey joined us back in 2015 and has spent his time with us creating our videos, searching out the most interesting news stories and and drafting up helpful guides to aid you in all areas of the gambling world. Whether you're looking for something helpful like a guide to mobile depositing, or something light like a top 5 list of the craziest gambling losses; Harvey will deliver it free of any pointless extra fluff.


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