Canadian online gambling company Amaya and British bookmaker William Hill said they were in talks to combine in a merger of equals, confirming a Reuters report about the discussions.
The all-share merger would be "consistent with the strategic objectives" of both companies, they said in a joint statement over the weekend.
Amaya has received strong buyout interest from other companies in the industry and some private equity firms, two sources familiar with the situation said.
The statement did not mention GVC Holdings, a sports betting and gaming company based in the Isle of Man which the sources had also cited as a suitor.
The sources spoke on condition of anonymity because they were not authorised to discuss the matter publicly.
The sources also said that former Amaya CEO David Baazov, subject of an insider trading investigation from Quebec's securities regulator, had abandoned plans to bid for the company.
Amaya said in February it had received a nonbinding proposal from Baazov to take the company private, but the formal bid never came.
Baazov resigned as CEO in August and was replaced by Rafi Ashkenazi.
William Hill, itself a subject of an approach from 888 Holdings and Rank Group, rejected a revised takeover bid from the two rivals in August.
Amaya paid $4.9 billion to acquire the owner and operator of the PokerStars and Full Tilt Poker brands in 2014, saying at the time that the deal created the largest publicly traded online gaming company.
The company's biggest revenue contributions are from the Isle of Man and Malta, while it has also expanded into France, Italy, Spain and Britain, and expects to soon gain regulatory approval to operate in the Czech Republic and the Netherlands. It sees its biggest growth opportunity in the US.
After a lengthy approval process, Amaya won permission to operate PokerStars in New Jersey, one of the first US states to legalise the business.
The company last year limited the operations of its StarsDraft fantasy sports business in most US states as a string of jurisdictions grapple with whether the fast-growing, multibillion-dollar industry constitutes illegal gambling.
Contests such as StarsDraft, in which players draft fantasy teams for sports including football, basketball and baseball, have drawn increased scrutiny from regulators since last year.
