On Tuesday morning analysts tuned in (bright and early if you’re in the U.S.) for Amaya’s latest earnings call, and they weren’t disappointed. Among other things, Amaya detailed its plans for 2016, including the launch of PokerStars New Jersey, potential online poker licenses in Russia, and the possible introduction of an online poker/eSports crossover product.
The earnings call comes during a difficult time for the company, as recent changes at PokerStars have left the online poker community in an uproar. On the financial front the company’s stock is down 50% from this time last year.
— Alexandre Dreyfus (@alex_dreyfus) November 10, 2015
Here are the highlights from the call:
The PokerStars New Jersey quagmire
It took two years for PokerStars to secure a transactional waiver to offer online gambling in New Jersey, but even with the approval it looks like PokerStars’ launch date is still several months off, and still very much in flux. When Amaya first announced the New Jersey Division of Gaming Enforcement had approved its application on September 30 many thought the launch would be just weeks away. That timeframe quickly became unlikely, and no sooner than early January started looking like a more reasonable launch date.
However, during the Tuesday earning’s call, Amaya CEO David Baazov forecasted the launch would occur in the first half (not quarter) of 2016 due to technical “surprises” and regulatory delays — which could be the rigorous testing process the NJDGE puts software through. The smart money is on the Q2 of 2016, considering Baazov predicted the company would receive approval from the DGE in Q3 of 2015, and that approval came on the very last day of Q3.
eSports crossover product
Under Amaya, PokerStars has grown from a poker-only product to a comprehensive online gaming suite. Since purchasing PokerStars back in 2013, Amaya has launched an online casino (full rollout is expected in Q1 of 2016), purchased and rebranded the daily fantasy sports company Victiv as StarsDraft, and added a sportsbook (full rollout expected in Q2 of 2016 or later) to its offerings.
Based on Baazov’s comments, it appears the company will be adding yet another product, as the Amaya CEO talked about a “new poker variant targeting the large and growing skilled video gaming community.” That sounds like some type of poker/video game/eSports crossover product.
Changes to VIP program
During the call the topic of the recent VIP changes at PokerStars was also broached, with Baazov concluding that the changes would be extremely beneficial to the ecosystem.
Baazov says it doesn't make sense for players to be sitting at a table breaking even and making money. Bad "player experience" he says.
— Chris Grove (@OPReport) November 10, 2015
From Russia with license?
During the call Baazov also said he anticipates Russia to issue online poker licenses in 2016, a development that would open up the largest gray market in the world to regulated online poker.
Baazov says the expectation for Russia is that online poker licenses will be issued in 2016.
— Chris Grove (@OPReport) November 10, 2015
The opening of the Russian market will be one of the most interesting developments in the global online poker world next year, as PokerStars is currently operating in the gray market. Legalization and regulation would likely increase their cost of doing business in Russia, although it would also provide a more certain future and likely open up marketing opportunities in the populous country.
Also of note
- PokerStars and its sister site Full Tilt Poker have an estimated online poker market share of 71%, with PokerStars accounting for 68% of that total.
- In Q3 of 2015 the company had 100k sportsbook and 300k iCasino users.
- Baazov said the company’s DFS revenues (from StarsDraft) were negligible.
- Amaya adjusted its “guidance” (estimated earnings) for 2015 from $1.456 billion – $1.564 billion to $1.289 billion – $1.339 billion.
- Baazov confirmed that the company’s sportsbook will be branded BetStars.
- 60% of new accounts now come from mobile devices, and 45% of real money players are on mobile.
- When asked about future expansion in the United States Baazov said “We don’t have a crystal ball… every year it’s next year,” seemingly in reference to the slow slog that is California.
- Eilers Research’s Adam Krejcik fired off this interesting tweet following the call:
Never a good sign when a company doesn't let analysts who've been critical of them on Q&A portion of earnings call… $AYA
— Adam Krejcik (@akrejcik) November 10, 2015