The Stars Group Acquires Majority Stake in CrownBet
The Stars Group, the Toronto-based parent company of global online-poker market leader PokerStars, announced yesterday that it had acquired a majority stake in CrownBet Holdings Pty Limited. CrownBet is the online sports betting arm of James Packer’s Australian Crown Resorts, and the 62.5% interest in CrownBet represents Packer’s former stake in CrownBet.
The all-cash deal was officially listed at USD $117.7 million, which translates to AUD $150 million. The deal will keep CrownBet’s current operation in place, though the terms of the deal allow The Stars Group to appoint a majority of CrownBet’s board of directors.
The deal has already received temporary approval from the Northern Territory Racing Commission, pending The Stars Group meeting “certain standard conditions.” The Northern Territory is the long-time regulatory home for all Australia-facing online operators, since it’s offered the most favorable tax rates and conditions for licensing.
“We are excited to enter the regulated Australian sportsbook market with CrownBet,” said Rafi Ashkenazi, Chief Executive Officer of The Stars Group. “CrownBet has become one of the fastest growing online sportsbooks in Australia through its strong management team, proprietary technology, mobile app, unique partnerships and market-leading loyalty program.”
As always, talk in Australia’s financial outlets — not to mention the poker world at large — turned to the deal as being a major part of The Stars Group’s plans to return legalized online poker to Oz. It’s been not quite a year since PokerStars and all other major international sites were forced to leave Australia due to changes in that country’s online-gambling laws that effectively barred all forms of online gambling excepting an Aussie staple –sports betting.
PokerStars will certainly use a formal toehold to advance the cause of online poker, which continues to seek a carveout of some form. However, the previous efforts to obtain such a legal carveout have been dashed more than once by the anti-gambling zealotry of power Australian Senator Nick Xenophon. Xenophon rose to power on a populist, anti-gambling platform, and has continued that crusade while in office.
However, the anti-gambling push of Xenophon and his political partners aside, the reports regarding The Stars Group acquiring a majority of CrownBet might be overselling the online poker angle. Any check into the Stars Groups’ finances would reveal that the company has been transitioning away, for several years now, from being a poker-only company.
The Stars Group’s main growth in the past few years has come from its newer online sportsbook and casino offerings, where the company has been able to leverage its “Stars” brand recognition into new business. If that’s not the game plan in Australia, where the BetStars brand is likely to get a big push, then it certainly should be. Online poker can come a little but later, once The Stars Group has established itself more firmly.
CrownBet itself is a newer kid on the Aussie block, having been created in 2014 as an online sidekick to Packer’s Crown Resorts, which operates a handful of luxury casino-resorts around the globe. However, Packer’s been caught in a couple of bad-press escapades in recent time, meaning that pulling back a bit and retrenching the core casino interests might not be a bad idea, either.
Many gambling-industry people are aware of the major problem Packer and Crown Resorts faced regarding China’s crackdown on several gambling channels, including finding ways to impair wealthy Chinese gamblers traveling to other countries. Packer’s Crown Resorts catered heavily to that upscale but underground Chinese trade, with the activity ultimately resulting in the arrests of a 19 Crown employees and execs a couple of years back.
More recently, it’s been Packer himself under the cold spotlight, for his involvement in the international corruption scandal centered on Israel’s prime minister, Benjamin Netanyahu. It’d be a stretch to connect the Netanyahu stuff to the CrownBet sale, but it’s nonetheless another indicator of the turmoil surrounding Packer and Crown in recent years.