Tombola has become the latest company to find itself the target of an aggressive acquisition plan. Dublin-based gambling company Flutter has been responsible for buying some of the most successful UK-based gambling companies over the years like SkyBet, Betfair, PaddyPower and Ladbrokes all now falling under the Flutter umbrella. The latest acquisition saw Flutter agree to buy UK-based online bingo company Tombola for £402 million.
These company acquisitions are nothing out of the ordinary with hundreds of smaller companies being bought by larger corporations over the years, but it’s part of an increasingly aggressive trend by bigger players in the gambling industry, and particularly iGaming corporations, to take over smaller companies.
Why is there such keenness to take over betting companies?
In the past year, gambling has seen a huge surge in the number of users. According to the UK Gambling Commission, 47% of UK residents had gambled in the 4 weeks previous to the 2020 study. 2020 saw the majority of the UK population either working from home or on furlough. This meant that for everyone who still had a job or had a job to go back to, they were now stuck at home with nothing to spend their time or disposable income on. This led to an increase in the number of people turning to gambling for entertainment.
Tombola is amongst one of the biggest bingo sites active in the UK (this list of no wager bingo sites gives some example of the competition), so it makes sense that if a company does want to acquire a bingo site, Tombola would be on their hit list. After all, this allows them to hit the ground running with a company that is already established and has a busy customer base.
In addition to this, the United States legalised sports betting at a federal level in 2018. While three years is a long time in the gambling industry, it’s taken time for individual states to debate and eventually legalise gambling in their jurisdictions, meaning that sports betting is still a new and fast-growing market in the US. Companies like MGM who have been responsible for several casinos and properties on the Las Vegas strip have turned their attention to their online presence. Many of these companies have partnered with existing online firms to benefit from their experience and knowledge. MGM partnered with Ladbrokes to launch MGMBet – an online sports betting and casino platform. MGM subsequently put in a bid to buy Ladbrokes in order to own the whole MGMBet company, but this has so far fallen through.
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Why the need for aggressive acquisitions?
The increasing trend of aggressive acquisitions across the iGaming space is part of trying to beat the crowd. Technology has long stagnated in the industry despite advancing quickly in the wider world of gaming. Some potential mergers represent the possibility of bringing some of this technology to the gambling industry.
These days we know that thanks to social media and instant messaging, news spread quickly – often much quicker than the people or company involved would have liked. Although this isn’t always an issue it can dent your negotiating power if the news of you wanting to acquire a company becomes public. Not only that but if other industry-related companies get the idea that a company could be taken over they might get some of their own ideas – and no one wants to be competing with another company when it comes to negotiates such as this. Being aggressive allows companies to lead the way and for transactions to be pushed to take place quickly – which helps to prevent any interference from outside parties.
Who are Aristocrat?
Australian based leisure company Aristocrat is well known for manufacturing gambling machines for bookmakers and casinos, like fixed-odds betting terminals (FOBTs). A few months ago, Aristocrat made a bid to buy gambling software developer Playtech and is currently waiting on a competitor to bid before the sale is finalised. Playtech is well known for developing software for online casinos – live dealer games, live roulette, live bingo, sports betting software and online slots are just some of the products that Playtech is known for. The merger of these two companies could signal that Aristocrat is looking to shake up the industry by bringing underused technologies to market.
What does this mean for the future of Tombola?
Industry experts have predicted that Aristocrat might try to create a hybrid style of gaming, allowing online users to join in-person gamers at the same table for a live game. This would encourage in-person users to try gaming online, and online users to try visiting a physical casino, and it would undoubtedly have an impact on the wider world of online gaming. That said, it is a brand that is already well known and loved as it is, so it could be that there are no immediate changes planned and instead the company intends to just see how things pan out in the future.
The future of company takeovers
The trend of huge companies making aggressive takeover bids is unlikely to stop as long as the continued growth of the gaming industry doesn’t plateau. These acquisitions not only give larger companies the chance to gain more of a monopoly in the industry but also create an atmosphere for more intense competition between rival industry behemoths. What’s most interesting is seeing the merger of technology companies behind the scenes, because if this trend continues we are surely going to see the use of more recent technology and new styles of gaming developed. Overall, it’s an exciting time to watch the industry grow.
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