Two of Australia’s biggest listed gambling businesses, Tabcorp and Tatts, have agreed to merge and create an $11.3 billion giant which will control more than 90% of Australia’s totalisator betting and generate revenues in excess of $5 billion.

The companies’ combined market capitalisation will be around $8.6 billion.

Boards of both companies unanimously agreed to the deal which will effectively give Tabcorp control of the merged business.

Tabcorp is a provider of wagering, keno, racing vision and gaming services including the TAB ( VIC, NSW & ACT); nationally;  Keno (VIC, NSW, Qld & ACT); Sky Racing; Sky Sports Radio; Tabcorp Gaming Solutions; INTECQ (Ebet), Luxbet and Sun Bets in UK and Ireland.

The Tatts Group operates lotteries, wagering and monitoring services including The Lot (NSW & SA Lotteries,  Gold Casket & Tatts NT); UBet (QLD, SA, TAS, NT) and Bytecraft and the Centralised Monitoring System (CMS) via Maxgaming (now incorporated into MAX).

Together the merged entity would control totalisator betting in every state and territory except Western Australia.

It would also likely to be a clear favourite to take over the WA tote, if the Government there proceeds with plans to privatise the business.

The merged business would also run the biggest suite of lotteries in the country.

However, the deal still needs approval from the Australian Competition and Consumer Commission (ACCC) which has expressed reservations in the past, including blocking a similar proposal in 2006.

The rapid growth of online betting and the influx of offshore gambling operations is one factor that has changed since the original merger plan was scuttled a decade ago.

However, ACCC chairman Rod Sims told an investment conference in Sydney last week he was concerned about the overlap between the two companies. Mr Sims said a key consideration would be whether online betting would provide sufficient completion to constrain the merged business.

The ACCC said it will be undertaking a comprehensive review of the planned deal.

“Our understanding is the proposed merger will require a public review that will examine a range of potential issues and areas of overlap, with the focus on various gaming and wagering services,” the competition watchdog said in a statement. The ACCC may also consider possible overlaps in other areas, such as systems for managing poker machines and lotteries/Keno.”

The focus is likely to be removing overlapping IT platforms, merging head offices and cutting jobs.

Tabcorp chief executive David Attenborough said the actual number of jobs to be shed had not been discussed. Tabcorp’s Paula Dwyer will continue to chair the new board, while Tatts chair Harry Boon will stay on as an independent director.

Ms Dwyer said the transaction would allow the business to invest, innovate and compete both in Australia and globally.

“This transaction is expected to deliver significant value for both sets of shareholders, and material benefits to other key stakeholders including the racing industry, business partners, customers, and governments,” Ms Dwyer said.

In a statement to the ASX, Tabcorp said the deal would provide an additional $50 million worth of funding to the Australian racing industry via larger wagering pools delivering stronger returns.

Mr Boon said the scale and efficiency benefits were needed to compete with the new business models and rapid consolidation of gaming and wagering companies globally.

The merger is expected to be completed by mid-2017 if approved by shareholders and regulators, with a full integration of the two companies not expected to be finalised for another two years after that.