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Online gambling firm 888 Holdings has submitted a revised proposal in its bid to purchase larger rival Bwin.party Digital Entertainment. The improved bid comes in response to efforts by GVC Holdings, which is also interested in acquiring Bwin.

In July, Bwin’s Board of Directors voted unanimously to accept a 900 million pound ($1.4 billion) offer, comprised of cash and stock, from 888. The board chose 888’s bid, despite a competing bid from GVC, which was higher but also more complicated. However, GVC has continued to work with Bwin, in an attempt to overcome issues with their bid, and has since offered an improved bid of 1.06 billion pounds. 888 countered with their latest offer, the terms of which are undisclosed. Some observers speculate it could be as high as 115 million pounds.

The bidding war fits into a larger trend within the industry. There has been a recent flurry of mergers, as firms try to increase their size as a buffer against a changing marketplace. Steep tax hikes in the UK have changed the arithmetic for many firms. 888 reported a decline in profits of 17% in the six months between December 30, 2014, and June 30, 2015. Although the company reported that underlying revenue remained up, they blamed the poorer than expected six month performance on the UK’s new tax rules. Regulations are tightening, as well. This has caused a rash of mergers. The already large firms Paddy Power and Betfair agreed to merge. Longtime industry leader in the UK William Hill attempted to purchase 888 in February, but was rebuffed. Mergers of this sort also allow companies to reap massive savings from economies of scale, as well as streamlined IT and marketing departments.

If successful, 888 has promised cost benefits of at least $70 million each year by the end of 2018, although industry watchers speculate savings could be much higher. Indeed, GVC predicts cost benefits of $150 million per annum, by the end of 2017. With the stakes for both companies so high, it is no surprise the bidding war has reached such a fevered pitch – and such lofty sums.

Bwin, valued at roughly 960 million pounds, has been up for sale since November 2014. The company, like its smaller rivals, offers casino, poker, bingo and sports betting. 888 Holdings seems to be best positioned to win the bidding, as Bwin has said its board is not yet reversing its July decision. The 888 bid has a higher percentage of cash to stocks, and experts point to its higher rated stock, larger size, and longer track-record, as compared to GVC.

For its part, GVC maintains it has offered the most qualifying bid. If, despite recent work to bring the GVC and Bwin closer together, Bwin’s board of directors accepts the bid of 888 once again, GVC has not ruled out an attempted hostile takeover. In the shifting tax and economic landscape of online gaming in the UK and elsewhere, companies must resort to drastic measures to stay competitive. Winning the bid to acquire Bwin could mean the difference between success and being pushed out of the marketplace.

Online gambling in the UK is big business. Over 2.1 million Brits participate in online sports betting alone, worth about 650 million pounds per year and rising. In fact, online sports betting has seen compounded annual growth of around 7% from 2009-2012. By purchasing Bwin, GVC, which owns the brand Sportingbet, will be making a play to compete with the likes of sports betting giant William Hill. As the marketplace changes with new regulations and higher taxes, size matters more than ever.

Bwin.party Digital Entertainment was itself formed from a previous merger, when in March 2011 PartyGaming and Bwin Interactive Entertainment joined forces. Best known for its poker room PartyPoker and its sports betting arm Bwin, Bwin.party was formerly the largest publicly traded online gambling firm. Its PartyPoker room was the largest online poker brand in the world, until the US Congress passed the Unlawful Internet Gambling Act of 2006. Sports betting is at the core of the company. Customers are able to bet on 90 different sports.

888 Holdings operates different online gambling platforms, including bingo, poker and casino. In 2008, the company launched a sports betting site operated by its subsidiary, Cassava Enterprises. In 2015, as legal online gambling returned to the US, 888 operated three of the four operational sites. The company was founded in 1997 by two sets of brothers, Avi and Aaron Shaked and Shay and Ron Ben-Yitzhak.

GVC holdings owns and operates the British online gaming service Sportsbet. They offer local sports betting, online gaming, casino. Sportsbet also operates the poker room Paradise Poker, which it acquired in 2006 and moved onto its own platform in early 2007. The company was acquired by GVC holdings in October 2012, while its Spanish and Australian operations were purchased by William Hill.

Whichever bid the Bwin board of directors approves, it will signal a major shift in the UK online gambling marketplace. The company which emerges victorious and acquires Bwin will be well positioned to compete, whereas the other will be forced to struggle for survival. The only question remains how high will the price tag rise.