Gambling companies that did mergers and acquisitions made record revenues in 2016. Apart from the spike in revenue generated because of the Euros, mergers and acquisitions also played a part in driving the companies’ growth last year.
Data from gambling companies’ Q4 and full-year 2016 earnings show that firms that did M&A’s were the biggest winners.
The calendar year of 2016 saw Paddy Power and Betfair merge to become the world’s largest public online betting company worth approximately £6b. That merger has resulted in Paddy Power Betfair (PPB) announcing expected full-year revenue to rise 18 percent from the previous year, reaching almost £1.55b.
In a similar turn of events, the October 2016 merger of Ladbrokes and Coral has had a positive impact on the revenue of the company. Ladbrokes Coral Group’s pro forma group operating profit for the full year of 2016 is expected to be within the £275m-£285m range, which is a 20 percent increase on 2015’s numbers.
In contrast, William Hill, who rejected 888 and Rank’s joint takeover bid, have seen their profits for 2016 fall £20m below expectations. That is a drop of more than £30m from their £291.4m operating profit from 2015.
The mergers and acquisitions in 2016 weren’t restricted only to the gambling industry. In April and December of last year, Catena Media acquired several iGaming affiliates. Those include CasinoUK, AskGamblers, and regulated US affiliates like PlayNJ and USPoker. Those acquisitions have driven Catena Media’s share price to a 250 percent increase after their IPO in February 2016.
To summarise, 2016 saw the highest number of M&A’s in the history of the gambling industry, resulting in companies making record profits. Compared to five M&A’s in three years from 2013 to 2015, 2016 alone witnessed a huge jump in the number of M&A’s with four. Such a spike is set to continue in 2017 as well.
The merger between FanDuel and DraftKings, announced in November 2016, is set to be completed this year, meaning the online fantasy sports companies are also now consoldiating in order to maximise reveneus and take greater control of the fantasy sports market. Furthermore, we could also see one of the biggest M&A’s in the gambling industry this year as Tabcorp and Tatts draw close to a merger. Together, they control 95 percent of Australia’s betting market.
There are also talks of William Hill and 888 merging with Playtech this year which, coupled with the impending M&A’s, could cross the £20b mark.
With governments across Europe pursuing regulation on the gambling market, the way forward for the industry is with M&A’s. Therefore, 2017 should have more of the same from the gambling industry.
