Stars Group Inc. (TSX:TSGI)(NASDAQ:TSG), formerly known as Amaya Inc., soared 15.15% on Monday following the announcement that the company is buying U.K.-based Sky Betting and Gaming in a deal worth US$4.7 billion. The move significantly beefs up Stars Group’s sports-betting business and provides the company with a much-needed foundation to grow across the European market.
The big Sky deal just over a month after a smaller US$117.7 million acquisition of a majority interest in the Australia-based CrownBet Holdings Pty Limited, which provided Stars Group with a front-row seat to the second-largest regulated sports-betting market.
Stars Group, known primarily for its online poker brands such as Poker Stars, is clearly making huge waves with its recent M&A activity in order to grab a dominant position in the rapidly growing sports-betting market. With such a strong base in sports betting and a solid reputation in the online casino world, there’s no question that Stars Group is a standout player that could continue to experience profound growth over the next three to five years should online gambling become allowed for and regulated across various target markets.
The Supreme Court is slated to make a decision regarding the legality of online sports betting across various states, which would serve as a development that could cause shares of Stars Group to rocket even higher.
With some of the industry’s top brands under Stars Group’s portfolio, there’s no question that a bet on the stock today could make one a huge winner over the next few years if target markets allow for such online platforms to enter. Moreover, synergies from the massive sports-betting deal and a meaningful diversification away from poker are major long-term positives.
After rocketing nearly 60% over the past year, however, the stock is definitely frothy. Given the uncertainties following whether or not select U.S. markets will be open for business and potential integration issues from recent acquisitions, the stock of the gaming giant, I believe, is itself a gamble in itself. So, if you’re already an owner of shares, it may be time to take some profits and just play with the house’s money for now.
Stay hungry. Stay Foolish.
