The competition regulator's apparently qualified approval of the merger of Australian gambling giants Tabcorp and Tatts shows just how much this industry has been disrupted by new competitors over the past 10 years.
The Australian Competition and Consumer Commission hasn't given the tie-up between the companies a full tick, as some concerns remain about a lessening of competition in some parts of the business, like monitoring and promotional services.
Still, the market seemed clearly satisfied that its statement was positive enough about the prospects for the deal, pushing the share prices of both companies up strongly on Thursday.
Tabcorp is the monopoly provider of retail betting outlets in NSW, Victoria and the ACT, while Tatts is the operator in all other states except Western Australia.
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Despite their vast footprint, the Australian Competition and Consumer Commission said on Thursday that the rise of online bookmakers like Sportsbet and Crownbet means a merger would not lessen competition in wagering.
To allay regulatory concerns and get the $11 billion takeover of Tatts across the line, Tabcorp has needed to agree to a number of actions, including at least one divestment in Queensland and striking a long-term pooling arrangement with the WA operator of its totaliser operations.
Among those concerns, according to competition ACCC chairman Rod Sims, was a consideration of "whether the combination of Sky Racing and Tatts is likely to materially increase the market power currently held by Tabcorp in its dealings with licensed venues and racing media rights holders."
The competition watchdog will announce its final decision in less than two months.
This provides only a small window of opportunity for competing bidders for Tabcorp or Tatts to dust off any plans. The only alternative offer, which came from a Macquarie-led consortium, has been quiet for several months now, and nothing has emerged from offshore competitors who had earlier been expected to get into bidding game.
Rival bids were considered more likely in the event that the ACCC blocked the Tabcorp/Tatts tie-up, in part because the same level of cost-cutting benefits could not realised by others.
The ACCC's Rod Sims says he recognises that combining these two companies will lead to them controlling the state totalisers in all but WA, and will also mean the merged entity will have more than 50 per cent of the wagering market.
But the two companies' market share has been in constant decline as online rivals gained traction - a point not lost of Sims.
He says there is no reason to believe that this won't continue.
Indeed this falling market share is the reason that TAB initiated takeover talks with Tatts.
The whole idea is that combining the two groups would provide sufficient synergies that would arrest weaknesses in profits from their wagering business.
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