The Stars Group - which runs PokerStars and employs 450 people in the Isle of Man - is effectively being taken over by another online gaming company.

It is merging with Paddy Power to create what is understood to be the world’s largest online betting firm with combined annual revenues of £3.8 billion.

Flutter - previously called Paddy Power Betfair- will own 54.6% of the merged firm.

It will be based in Dublin and Flutter’s chairman and chief executive will continue in role for the merged firm.

In a statement, the Stars Group said the Isle of Man will remain a key operational hub for the ’foreseeable future’.

Only last month it announced that up to 80 jobs at PokerStars were potentially at risk.

A spokesman said: ’The Stars Group is currently domiciled and headquartered in Toronto, while the island is the key operational centre for TSG.

’Under the combined business we expect the Isle of Man will remain an important operational hub for the foreseeable future.’

Paddy Power traded in the Isle of Man for many years until the merger with Betfair (now Flutter) when the Douglas office was closed.

Rafi Ashkenazi, chief executive of the Stars Group, will become chief operating officer of the combined group.

In a joint statement he said: ’This exciting combination will allow us to enhance and accelerate our existing strategy. In recent years, we have transformed The Stars Group from a single product operator in poker, to a diverse global leader with multiple product offerings across poker, gaming and sports betting.

’The combination with Flutter will further enhance our company’s core strengths, and position us strongly for the future in this rapidly evolving industry.

’I’m delighted to be joining the board of the combined group and to serve as its chief operating officer.’

office

The Stars Group’s Manx outfit is based at Onchan Head, which it bought in 2012, and an office in Douglas.

It is one of the island’s biggest employers and a significant contributor to its gross domestic product.

The merger news comes after Isle of Man Newspapers last month broke the news that PokerStars had told staff it would be making redundancies in the island, citing ’headwinds over the last year, including disruptions in our key markets’.

But then the e-gaming giant stressed it would retain the island as a ’critical operational hub’.

Flutter chairman Gary McCann will become chairman of the combined group while Flutter chief executive Peter Jackson will head up the firm in the same role.

Flutter Entertainment said it would combine with Nasdaq and Toronto-listed Stars Group. The new merged group will also be boosted by the partnership in the US, recently created between the Stars Group and Fox Sports.

PokerStars is the world’s largest online poker site.

The merger also comes amid a period of unprecedented change in the global betting industry, which has seen a raft of deals in recent years amid the rise in online gaming and regulation crackdowns.

If the deal is approved by shareholders of the two firms, it is expected to complete in the second or third quarter of next year.

Following the transaction, Flutter said it will have customers in more than 100 international markets.

The merged company will be listed on both the London Stock Exchange and the Irish stock exchange Euronext Dublin.

Peter Jackson, chief executive of Flutter, said: ’The combination represents a great opportunity to deliver a step change in our presence in international markets and ensure we are ideally positioned to take advantage of the exciting opportunity in the US through a media relationship with FOX Sports as well as our development of US sports betting through Flutter’s FanDuel and TSG’s (The Stars Group’s) FOX Bet brands. We are committed to these two high quality brands to drive the growth of the combined group in the US.

’The combination will turbocharge our existing four-pillar strategy and provide world-class capabilities across sports betting, gaming, daily fantasy sports and poker, as well as greater geographical and product diversification.

’We believe the combination of Flutter and TSG will deliver substantial value for shareholders.

’We will have an exceptional portfolio of leading recreational brands and best-in-class products on industry-leading technology platforms.’

The news of the merger came as gaming industry chiefs prepared to gather in the Isle of Man for the 10th KPMG e-gaming summit.