N E W S A N A LYS I S / P O K E R S TA R S
NEWS ANALYSIS
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and certainly the numbers will tell their own
story. PokerStars player numbers haven’t
dropped on pokerscout and the latest
Amaya results suggested revenues were
expected to be strong until year-end. The
general impression is it will be all sound and
fury signifying nothing.
PokerStars says its test launch on the
Full Tilt brand in the regulated Spanish
market went down well, with 30% of poker
customers playing casino monthly. “We
thoroughly researched the opportunity and
spent a lot of time talking to players and
analysing the behaviour of our customers
on PokerStars.es and Full Tilt,” Hollreiser
said. “The experience on our poker
platforms to-date also shows increases in
net player deposits following the addition
of casino games and a negligible impact on
poker spend.”
PokerStars will also enable features
that will allow customers to remove the
additional games from their view and to
opt out of direct marketing and promotions
of the casino games. And it’s hard to
argue against the decision from a business
perspective, particularly when Amaya has
the small matter of interest payments on
$4bn of loans to contend with alongside
trying to drive investor value.
“I think it’s a necessary move in order
to continue to show top-line growth,”
Adam Krejcik, managing director at Eilers
Research, says. “PokerStars dominates the
global online poker market and most of
the data we have seen indicates the overall
market is in a decline. While it’s still possible
for Amaya to grow online poker revenues,
it will be increasingly difficult going forward
and therefore entering new verticals is a
natural extension.”
The impression given by those with
knowledge of PokerStars’ operations
is the launch of both casino and sports
betting is designed more as a cross-selling
opportunity than an attempt to create
a new acquisition channel. Even a small
cross-sell success rate is likely to lead to a
huge increase in revenues for Amaya. It also
reported 50% of Full Tilt casino players said
the site is the only online casino at which
they play, so it could create new players too.
It’s a strategy PartyGaming adopted in
late 2005, with the casino vertical going
from 16% of non-US revenues in 2006 to
32% in 2007 and achieving parity with
poker by the end of 2010. And PokerStars
will be hoping to repeat the trick in
2015. But will the short-term benefits
lead to some unexpected long-term
consequences?
“Investors for the most part view this as
a favourable strategic move (so short-term
positive), the mid-long term reaction will
be based on whether or not they meet
management targets and analyst forecasts
and there is no material adverse impact to
its brand or its flagship poker product or
service,” Krejcik says. But while the casino is
a more natural brand extension, the launch
of a sportsbook raises more intriguing
issues.
BUILDING FOR THE FUTURE
PokerStars appears to be positioning the
sportsbook as a legitimate and serious
trading operation with limited reliance
on third-party technology. A gaming
operator might be expected to white-label
an existing solution, or at most buy in the
back-end technology and rely on adding
a margin to pricing feeds to offer a service
to its existing casino and poker customers.
That doesn’t appear to be the case with
PokerStars, which is quietly going about
building up something quite different.
The firm has recruited ex-Victor Chandler
man Ian Marmion to build a trading team
and job adverts are running for quantitative
analysts and various sportsbook trading
functions. This is not the actions of a firm
looking to just tick the box and offer those
customers who really don’t want to go
elsewhere an option to bet $50 on the
weekend’s Premier League action. “I think
from everything I hear they are starting
to get a good team in place over there
and their approach seems to be quite well
thought out and seem to be playing a little
bit of a longer game and investing a lot of
money in this,” one sportsbook veteran told
eGaming Review.
But he raised questions on the viability
of this approach. “I’m not saying it can’t
be done but it’s a very expensive way to
go about it. If you look at William Hill six or
seven years ago, they spent 20-odd million
pounds in attempting to develop their own
software, so some of the biggest names in
the industry have tried and for whatever
reason it didn’t quite work for them.”
But Amaya is clearly playing the long
game here with customer satisfaction
hugely important. It wants to build a
sustainable sports betting business, and is
prepared to invest in getting the product
right. Sportsbook is just one of many
plans it has to increase its share of wallet.
It’s previously stated aim is to monetise
PokerStars’ huge 89 million-strong
customer database with a number of
extensions into the world of entertainment.
“Looking beyond the gaming industry, I
think one potential area to explore would
be targeted advertising to its very large and
coveted player database. This would likely
involve some type of partnership with a
media or internet company and could take
on a number of forms,” Krejcik notes.
Perhaps the launch of sportsbook will
soon be seen as a minor change in the
overall development of the PokerStars
brand to a fully fledged entertainment
company. While the industry will be
wondering how the firm will execute on
sportsbook and casino, perhaps they should
be thinking of what its next move might be.
Amaya has shocked the industry once with
its acquisition of PokerStars, and it is likely
to cause more surprises in future.
But for now it needs to get sports right.
And one thing is for certain: the industry’s
image of PokerStars needs radically
rewriting over the next 12 months. Its
success or failure in these new verticals will
do more than just define its success in the
short-term. This is the start of a new era for
the brand and the industry needs to watch
closely what comes next.
W W W. E G R M A G A Z I N E . C O M