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Simon Dawson | Bloomberg | Getty Images The owners of Paddy Power Betfair and Poker Stars have agreed to merge in an all-share deal that will create the world's largest online betting

and gambling company by revenue to take advantage of the opening up of U.S. markets. Flutter Entertainment, formerly known as Paddy Power Betfair, is to combine with Nasdaq- and

Toronto-listed Stars Group (TSG), owner of Poker Stars, the companies said on Wednesday. Following the merger, shareholders of Flutter would own approximately 54.64% of the new company, with

TSG shareholders owning about 45.36%. The merger is the latest in a series of deals as the industry responds to the growing number of gamblers using online and mobile devices and the

opportunity created by the relaxation of rules on sports betting in the United States. Shares in Flutter jumped 15% in early trading, while gambling rivals GVC and William Hill were also

lifted by the prospect of further consolidation. Combined annual revenues would have totaled 3.8 billion pounds ($4.7 billion) in 2018, making Flutter-TSG the largest online betting and

gaming operator globally, the companies said. Flutter CEO Peter Jackson, who will retain his role in the combined group, said the deal would "turbocharge" Flutter's existing

strategy and "provide world-class capabilities across sports betting, gaming, daily fantasy sports and poker, as well as greater geographical and product diversification." The

merged group will have its headquarters in Dublin and its main listing in London. FOX BACKING The merged group will be boosted by a partnership in the United States with FOX Sports, which

will have the right to acquire an 18.5% stake in Flutter's FanDuel U.S. business from 2021. Dublin-based Flutter merged its U.S. business with fantasy sports company FanDuel last year

in a deal it said would create the industry's largest online business in the United States. TSG had bolstered its British operations last year when it bought Sky Betting & Gaming in

a $4.7 billion deal. Flutter has sharpened its focus on North America as the potentially huge U.S. market opens up and it faces higher taxes and increased regulations in its main British,

Irish and Australian markets. Betting exchange Betfair and Paddy Power, which runs high street betting shops as well as an online business, merged in 2016, although the integration took

longer than anticipated and a toll on product investment for a time. The merger is expected to deliver pretax cost synergies of 140 million pounds per year, along with opportunities to

cross-sell products to one another's customers in international markets and lower finance costs, the companies said. The deal is also expected to boost Flutter's underlying

earnings per share by at least 50 percent in the first full financial year following completion. Under the terms of the merger, TSG shareholders will be entitled to 0.2253 new Flutter shares

for each TSG share. _(Disclosure: CNBC parent Comcast and NBC Sports are investors in FanDuel.)_