Flutter Yanks PokerStars Out of China, Other Nearby Markets
Posted on: September 5, 2020, 01:32h.
Last updated on: September 6, 2020, 12:44h.
Flutter Entertainment is turning off its PokerStars unit in China, Macau, and Taiwan, exiting some markets it gained access to via the recently completed acquisition of The Stars Group (TSG).
Earlier this year, UK-based Flutter completed its $12.2 billion takeover of TSG, creating the world’s largest online gaming entity. That enhanced the buyer’s positioning in marquee, regulated betting markets, such as Australia, the UK, and the US.
However, online poker isn’t regulated in China. It’s banned in the world’s second-largest economy. In 2018, Beijing issued a directive mandating that internet gaming platforms cease offering Texas Hold ‘Em — one of the most popular iterations of poker — and other related games. Related to that order, the government also banned transfer of cryptocurrency to poker sites, and went so far as to silence the talk of poker on popular messaging apps Weibo and WeChat.
There were a small number of The Stars Group jurisdictions that Flutter had previously determined it would not operate in, and in such cases, these markets are being switched off,” according to a Flutter statement obtained by Fox Business.
The Betfair parent said it’s reviewing compliance standards and market exposures obtained through the purchase of TSG. In addition to PokerStars, buying TSG gave Flutter access to another poker property — Full Tilt — and Fox Bet.
PokerStars’ departure from China, Macau, and Taiwan went into effect on Sept. 1, and the move will result in an $86.23 million charge against earnings.
In Asia, the Philippines is the only market in which online gambling is legal and regulated. However, some market observers believe Macau concessionaires should heed clues from the coronavirus shutdown employed earlier this year and embrace online gaming. Those experts say unsanctioned internet betting spiked there, as gamblers couldn’t access land-based casinos, and it would be wise for operators to tap into online demand.
For now, Beijing is going the opposite direction. In June, the government deemed cross-border money flows for gambling purposes as a national security risk, clamping down on illicit gaming and cryptocurrency platforms.
Flutter’s departure from the aforementioned Asian markets can be construed as the latest sign of the company’s intent to focus on the fast-growing US sports wagering market, which it has access to via FanDuel and Fox Bet.
FanDuel, which traces its roots to daily fantasy sports (DFS), is now the second-largest online sports betting company in the US, behind DraftKings, while Fox Bet is ninth on that list.
This week, rumors surfaced that UK-based Flutter could be mulling an initial public offering of Fox Bet and a spin-off of FanDuel as an avenue for unlocking shareholder value. It hoped to tap into the soaring multiples financial markets are assigning to companies with exposure to US sports wagering.
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