Star Sports makes cautious approach for Sporting Index assets

Star Sports has notified the UK’s Competition and Markets Authority (CMA) that it would be interested in acquiring segments of Sporting Index’s business.

In January, the CMA intervened on the acquisition of Sporting Index by main rival Spreadex, citing that the deal should be evaluated against the Enterprise Act of 2022 as to whether the merger would significantly diminish competition in the UK spread betting market.

Reviewed by an independent panel, the CMA was recommended that the merger would reduce competition in the market. However, competition concerns could be addressed by a sale of Sporting Index assets in order for Spreadex to maintain a “point of unique competitive distinction” for customers.

Star Sports responded to the CMA, stating: “Star Racing are interested in pursuing a divesture package that will help correct the SLC caused by the merger between Sporting Index and Spreadex.”

“Due to the point at which this merger has now progressed to, the package itself will need to be creative and diverse. Elements of both Spreadex’s assets and Sporting Index’s assets must be included.”

Star Sports believes that its own assets and expertise in the UK betting market could be combined with specific Sporting Index assets to help create a viable competitor in the spread betting market.

Despite its interest, Star Sports approaches Sporting Index assets with caution as “there are concerns over the damage caused to the brand by Spreadex.”

Star feels that Spreadex has devalued the brand by moving customers over from proprietary technology to a standardised ‘white label’ product, by wiping out almost the entire Sporting Index workforce, and (as a result) providing clients with an overall lesser service.”

Spreadex’s Response

In response to the CMA’s findings and Star Sports’ approach, Spreadex strongly disagreed with the regulator’s provisional solutions of selling its own assets as part of the divestiture package, calling it “unreasonable and disproportionate.”

Spreadex argued that any forced sale of its assets would cause significant harm to its business operations and its customers. The company believes that transferring its own assets would be an undue burden, distorting the spread betting market instead of enhancing competition as the CMA intends.

Spreadex further added: “Whenever there are several appropriate measures, the less onerous option must be pursued. In this case, we believe that a more limited sale of Sporting Index assets would resolve competition concerns without causing undue harm to our business or the market.”

The company also warned that allowing Star Sports or any other firm to acquire both Sporting Index and Spreadex’s assets could limit innovation in the industry by consolidating too much technology under a single entity, which runs contrary to the CMA’s objectives.

As an alternative, Spreadex proposed a limited sale of Sporting Index assets and offered to provide a Transitional Service Agreement. This would allow the new owner of Sporting Index to build its own technology and operational capabilities while Spreadex temporarily supports the business during the transition period.