The word “merger” sounds like a big threatening word in the world of markets. It suggests you’re getting tag-teamed, double teamed, or otherwise boxed out. As if on a political chess board or war game (or actual war), the natural instinct is to build alliances and make sure you’re not being outcompeted or that the balance of power isn’t too tipped to one side. That makes sense in the world of politics where everything is violence and force and might. But in markets where all transactions are voluntary and the small in principle can outcompete the large just by virtue of pleasing consumers better, a merger need not necessarily be matched out of fear.

We’ve seen three big mergers since July in UK gaming. It began with Gala Coral and Ladbrokes, then on to Paddy Power and Betfair, and finally GVC and bwin.party. On the face of it, these three power moves seem to leave 888 and William Hill behind and threatened, but that’s not the case, at least not with all three. Two of these three mergers are not being completed under ideal circumstances, and can more be thought of as salvage operations. The only one that seems to really be a synergy is Paddy Power and Betfair.

First, the Gala Coral and Ladbrokes merger was primarily about digital. Keep in mind that Ladbrokes had been a digital basket case and was thoroughly outcompeted by William Hill from 2013 on. Gala Coral and Ladbrokes’ merger is more of an attempt at catch up than any concrete threat to William Hill. Just to review the numbers once more, Ladbrokes’ digital revenue accounted for 6% of operating profit in 2013, and Hill’s 48%. The numbers have evened out a little bit since Ladbrokes hired Playtech, but Ladbrokes is still behind, though less so with the Coral merger. Market pricing always speaks louder than speculation, so here’s what I said about this merger after it happened:

If you’re looking for a way to trade the merger… go long PlayTech rather than Ladbrokes. Ladbrokes will still have to contend with heavy taxes on its machines, whereas PlayTech has no exposure to those taxes. Now, however, is not the time to go long anything, but when money supply starts growing again, PTEC is a smarter move than LAD for when the time comes.