According to The Sunday Times, no agreement was made and discussions have come to an end.
Based on the two companies' current market cap, an enlarged group would be worth £9.7bn ($12.77bn).
With the decision from the government to reduce the maximum stake on fixed-odds betting terminals to £2, gambling operators are remaining cautious about any kind of takeovers during this period of uncertainty.
Paddy Power Betfair merged with operator FanDuel in July, taking a 61% share in the merged business, while Stars Group bought Sky Bet for $4.7bn in the same month.
