UK’s competition watchdog has instigated an inquiry into the merger between Swedish online casino content and technology suppliers Evolution Gaming and NetEnt to determine what impact the mega-deal will have on competition in the local gambling space.
Evolution tabled an offer to buy its fellow provider this past June in a bid to strengthen its position across regulated European markets as well as in the US where both companies have been seeking to grow their market share.
Evolution’s offer valued NetEnt at SEK19.6 billion (approx. $2.2 billion), which means that a combination of the two will create a true B2B gambling powerhouse.
Both companies have a strong presence in the UK and this is why the Competition and Markets Authority’s (CMA) review should not really come as a big surprise.
In a notice published Tuesday, September 22, the regulator said that it has launched an investigation into the proposed tie-up and that it wants to determine whether the deal will “result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”
Evolution specializes in the provision of live casino solutions, while NetEnt crafts and supplies online slots and table games. The latter has also been investing heavily in its own live casino arm in recent years.
CMA Review Delays Initial Deal Closure Timeline
The CMA launched its merger inquiry this past Monday, September 21, and invited interested parties to submit their comments on the mega-deal by October 5. The regulator said in its Tuesday notice on the investigation that it would deliver a decision by November 16.
However, the CMA warned that the deadline of the case, as it is with all of its cases, could change at any point during the merger assessment process due to a number of reasons.
When it announced its offer earlier this year, Evolution said that the period within which its bid should be accepted would expire on October 26 and that it expected to finalize the transaction on November 2.
With the CMA’s review of the company’s merger with its fellow supplier and the regulator’s deadline, the closure of the deal could now be pushed back. And if the regulator finds any issues with the tie-up, its finalization could be delayed even further.
Evolution said earlier this year that its “position within live casino with NetEnt’s position within online slots will create a company well positioned to take significant market shares.” As mentioned earlier, the combination will enable both companies to explore US expansion opportunities well beyond what they have already achieved in that market.
In August, Evolution announced live casino content deals with two US-facing operators to extend its footprint across the pond. It first teamed up with PointsBet, an Australian bookmaker that first entered the US in the summer of 2018 when it went live in New Jersey and has since then expanded in Indiana, Iowa, Illinois, and Colorado.
The live casino specialist then announced a partnership with BetMGM, the online sports betting and gaming brand of the joint venture between Las Vegas casino powerhouse MGM Resorts International and GVC Holdings.
As for NetEnt, it has too signed a slew of US deals in recent weeks. Last week saw the company land a West Virginia content supply alliance with BetMGM, while on Tuesday it announced that it has teamed up with Wind Creek and has rolled out its games with the Pennsylvania-based casino’s recently launched online operation.
Wave of M&A Deals
Evolution’s proposed marriage with NetEnt is the latest M&A deal in the online gambling space that has been announced or completed this year.
In April, US sports betting operator DraftKings merged with European gambling technology provider SBTech in a three-way deal that also included special purpose acquisition company (SPAC) Diamond Eagle Acquisition Corp. and saw the combined group go public on NASDAQ.
Golden Nugget Online Gaming, Inc., the digital gambling arm of Tilman Fertitta-owned casino empire Golden Nugget, announced in June that it would merge with blank check company Landcadia II to list on NASDAQ.
And in July, Rush Street Interactive, Inc. announced that it would too go public on NASDAQ through a merger with a SPAC. The operator, which is the iGaming unit of casino operator Rush Street Gaming, has teamed up with dMY Technology Group.
In May, Irish gambling giant Flutter Entertainment tied the knot with Canadian rival The Stars Group. That deal created the largest publicly traded online gambling company with a brand portfolio that includes Paddy Power, Sky Betting & Gaming, and PokerStars, among others.
In the B2B space, there have recently been reports that one of Playtech’s largest shareholders, long-time gambling industry investor Jason Ader, has been pushing for the technology giant to be sold to DraftKings. Mr. Ader confirmed these reports by saying in a recent interview that the betting operator “should be making a stock-for-stock deal with Playtech.”
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