CMA: Spreadex and Sporting Index’s Merger May Have Created a Monopoly

The United Kingdom’s Competitions and Markets Authority (CMA) believes that the recent merger between Spreadex and the Sporting Index’s B2C business might have resulted in a substantial lessening of competition. The decision was published on April 4, providing the two parties with five working days to address the matter or have the transaction referred for a Phase 2 investigation.

The original merger occurred in 2023. However, the CMA eventually considered the impact of the transaction and, on February 6, launched an inquiry into the deal. For reference, Spreadex and the Sporting Index both offer fixed-odds betting and sports spread betting, causing concerns that their union might monopolize the market.

After inviting comments from February 6 to February 20, the CMA evaluated the information and, on April 4, announced its decision. The authority confirmed that the merger of Spreadex and the Sporting Index might provide the parties with an unfair market share.

The CMA has decided, on the information currently available to it, that it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

CMA statement

As a result, the CMA will refer the case for a Phase 2 investigation. However, Spreadex and the Sporting Index can prevent that if they offer acceptable undertakings to address the aforementioned concerns.

The companies now have five working days to respond.

No One Else Offers Spread Betting in the UK

For reference, sports spread betting involves betting above or below a range of outcomes rather than standard “win or lose” outcomes offered by fixed-odds betting. The more correct guesses a customer makes, the bigger their reward is. On the contrary, the more mistakes they make, the higher their loss.

Since Spreadex and the Sporting Index are the only two licensed entities offering spread betting, this deal could result in a monopoly, the CMA warned. While the two entities suggested they would be constrained by fixed odds betting providers, the authority remained unconvinced.

As a result of the possible monopoly, Spreadex’s incentive to offer competitive odds for customers could be lost, the CMA said. Naomi Burgoyne, decision maker at the CMA, explained:

We believe that this deal could remove competition for sports spread betting services and give Spreadex a monopoly in this market. It is important that customers can rely on competition in the market to keep odds competitive.

Naomi Burgoyne, Phase 1 decision maker, CMA

If Spreadex and the Sporting Index fail to convince the authority that the merger has not created a monopoly, the merger will proceed to the more in-depth Phase 2 investigation, the CMA concluded.