Two of the most prominent gambling icons in the industry have decided to join forces and create the world’s largest online gaming sensation. Not that long ago these two gambling groups were known as rivals, but with the new regulations and higher tax laws that have taken place in the United Kingdom, the merger will help them both cut their cost dramatically and thus, create a win-win situation for both companies.
Paddy Power, originally from Ireland, was formed by three Irish bookmakers in 1988, Stewart Kenny, David Power, and John Corcoran. The three bookmakers merged their shops together and started a marketing campaign throughout Ireland by opening strategically placed shops in its towns on major roads where they could be visually seen and easy to get to. With a fierce increase in business throughout Ireland, they decided to expand into the United Kingdom in the year 2000.
Paddy Power is known for controversial betting odds so that they can continuously be in the public eye and obtain consistent media coverage. The crazier the bet, the higher the stakes, and the higher the stakes makes headline news. By the year 2011, Paddy Power was the largest contender in Europe.
While Paddy Power handled bets of all kinds from horseracing to online bingo games, Betfair is known as the largest online betting company in the United Kingdom and is considered the largest betting exchange in the world.
Located In England, Betfair was established in 2000, by Andrew Black and Edward Wray. Betfair quickly started branching out in several different fields to add to their already impressive portfolio. Within just a few years Betfair purchased a horseracing publishing company and radio service in England and a TV network in the United States. In 2011, Betfair decided to reorganize and moved a part of their operations to Gibraltar to cut their tax deficit.
Betfair considers their odds better than those offered by a traditional bookmaker, at an average of 20 percent. Their business has become very diversified over the years and they have opened in many different countries such as Italy, Bulgaria, Australia, Malta, Austria, Germany, and Tasmania.
Paddy Power and Betfair have both been under a lot of scrutiny from several different country gambling commissioners about the way that the companies have conducted their businesses. With Paddy Power false advertising their wares to the hacking of customer information and Betfair being looked at because of suspicious betting patterns to not paying their customers winnings, both companies were criticized for the way they each handled the situations.
On August 26, the two companies made the announcement in a joint statement that they were combining their companies into Paddy Power Betfair, with the shareholders for Paddy Power having a 52% control of the new company and Betfair at 48% for their shareholders. The merger strengthens their already considerable positions in the world of sports betting and gambling online and in shops throughout the globe. The opportunities that this merger offers is mind boggling. The new company will be working out of Dublin, Ireland, but will continue to work from England, as well. With revenues for both companies topping 1.5 billion Euro dollars recently, the potential for an outstanding financial future is astounding.
According to the announcement, frontman Gary McGann, who is presently the chairman for Paddy Powers, will hold that same position for the new company. Breon Corcorcan, the CEO for Betfair, will become the Chief Executive Officer for the new group. Andy McCue, (Paddy Power’s current CEO), will become the Chief Operational Officer and Executive Director along with Alex Gershwould, (Betfair’s current CFO), who will be the new CFO and Executive Director of the new Paddy Power Betfair Group.
The competition of the gaming and sports betting industry has become extremely competitive and this merger shows the intensity of the future gaming industry as a whole. Merging Paddy Power and Betfair and their brands will give them a lead in the industry in several different countries including the UK, Australia, France, Italy, and United States. Just since the merger was announced their market shares have gone up an average of 17% for both companies.
With an eye on the future markets and how the consumer is changing to the convenience of online betting instead of walking into a retail establishment, Paddy Power Betfair feels that the future of betting is online on computers and mobile devices, (smartphones).
Paddy Power will continue to research and invest in the digital market as they have two new mobile apps set for release towards the end of this year. These apps will give their customers an improved design and allow for an easier and quicker way to navigate to online betting. In releasing these new apps, Paddy Power will be able to relinquish future updates and new features much more quickly. With the release of the new apps, Paddy Power’s structural base for future inventions that are always in their product development departments, will help put them in a solid position globally for their market.
The merger of Paddy Power and Betfair to Paddy Power Betfair is the wave of the future. These two companies have set the precedent of mergers to come. Will the next merger surpass Paddy Power Betfair? That, obviously, remains to be seen.