Poker falls but casino soars for Amaya

Poker falls but casino soars for Amaya

Wednesday, March 22, 2017 Posted by Scott Longley
Sterling’s slide hurts ‘Stars in UK

PokerStars’ spell of enjoying its defiance of gravity when it comes to the negative growth seen elsewhere in the global poker market would appear to be at an end after parent company Amaya released details of its annual results showing a 5 percent fall in poker revenues.

Admittedly, adjusting for currency fluctuations the fall would have been limited to 1 percent but still, the percentage of total revenues gained from poker now represents 70 percent of total revenue, down from 78 percent in 2015.

Particularly affected by the currency issues was the UK where total revenues fell 14 percent in the fourth quarter as sterling continued its post-Brexit vote slide.

It was online casino which came to Amaya’s rescue, helping to push revenues up 7.8 percent for the year to C$1.16bn. Poker revenues for the year came in at $846.1m. The company didn’t break out its casino earnings, but alongside the struggling sportsbook business the two products generated 22.8 percent of total revenues for 2016 or circa C$264.1m.

The company was keen to stress that its poker business was now more focused on more recreational players – and hence lower spending– and indeed poker actives in the fourth quarter rose to 2.5 million from 2.26 million in the seasonally quieter third quarter. At the same time, its active casino players rose substantially in the fourth quarter to circa 650,000 players compared with circa 490,000 in the previous three months. Sportsbook, meanwhile was relatively static at around 250,000 actives.

Geographically, 63 percent of total revenues were generated in the EU, a further 18 percent came from other European territories, 13 percent from the Americas and six percent from the rest of the world.

The company didn’t say how these percentages had shifted year-on-year, but it did show in its accounts that the money it paid out in gaming taxes declined to C$113.1m from C$139.2m though this was largely down to the on-off payment to Austria of back taxes which occurred in the fourth quarter 2015.

Amaya’s performance in some of the key regulated markets that are disclosed showed that revenues from the UK declined in the fourth quarter to C$17.1m from C$20m, with the damage mostly done in poker where there was an 18 percent decline. This is the ground zero for the currency fluctuations which affected the company with Brexit-affected sterling falling substantially over the course of the year and this would likely have had an effect on revenues.

Italy, in contrast, was on the up with revenues rising 17 percent overall in the quarter to C$30.5m helped along by a doubling of casino and sportsbook revenues.

France was up 11 percent to C$15.1m, helped almost wholly by the introduction of sportsbook, and Spain was up 16 percent on the back of casino and sportsbook rises with poker almost static.

Amaya endured a controversial 2016. It’s former chief executive David Baazov resigned in the midst of a share-trading scandal and later returned with a takeover offer that fell apart almost as soon as it was announced. The company also saw a failed £4.6bn merger with William Hill called off after a major William Hill shareholder called into question the long-term viability of the PokerStars product.

Totally Gaming says: As with 888 yesterday, Amaya stands out as a potential merger partner for any company willing to bet that any decline in poker revenues long-term can be more than made up for by its other products. Away from the shadow of David Baazov, it is clear that the ‘Stars brand has an international appeal and this makes it an attractive asset.

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