GPWA Times Magazine - Issue 33 - October 2015

according to data provided by GBGC. Ladbrokes and Coral ranked ninth and 11th in GGY in 2014, respectively. But that was not even the final piece of the industry consolidation puzzle this summer. In late August, sportsbook gi- ants Betfair and Paddy Power reportedly agreed to merge in a £5 billion deal, mak- ing the Ladbrokes-Coral combination look small time. Paddy Power and Betfair ranked fifth and sixth in the world among interactive gambling companies in 2014 with GGYs of £438.6 million and £393.6 million, respectively. Combining the two would immediately vault the new firm ahead of bwin.party-888 and PokerStars. “By putting together two distinct but phenomenally strong brands, we’ll have a market-leading position in the U.K., Ireland, Australia and in the United States,” Betfair CEO Breon Corcoran told BBC News following the announcement of the merger. Corcoran, who formerly served as the COO of Paddy Power, will lead the new powerhouse operator as chief executive. “We fundamentally believe this industry is all about scale,” Corcoran said. It remains to be seen how these merg- ers will change the scope of the on- line gambling industry in the long run. When PartyGaming first merged with bwin Interactive in 2011, it was not a success as the two companies struggled with integration. “These things generally happen because they’ve been forced upon you,” Bartlett says. “Most companies like to run their own businesses. When you start talking about mergers, you’re talking about lots of headaches down the road. Who’s going to be retained, who’s going to be promoted, software choices, integration of software. It creates as many headaches as benefits.” The headaches are necessary, though, if an operator wants to remain viable in the growing but heavily taxed online gam- bling industry. As the industry matures and companies pool their resources, fi- nances and talent, it simply won’t be possible for a small operator to sustain its customer base as its competitors turn into behemoths. What industry consolidation means for affiliates On May 1, 2015 – less than a year after be- ing acquired by Amaya – PokerStars an- nounced in an e-mail to affiliates that it would “pay revenue shares to affiliates for only the first two years of activity on a player’s account.” The site killed lifetime rev share for its affiliates, both going for- ward and retroactively. Conventional wisdom dictates that this trend will continue as the online gam- COVER STORY Mergers and acquisitions: How affiliates fit into the online gambling ‘new normal’