Online Poker Might Not Be The Biggest Revenue Generator For Amaya In The US

Avatar August 24, 2015 1664 Reads
Amaya online casino vertical PokerStars

Since acquiring the Rational Group as part of a blockbuster $4.9 billion deal in June 2014, Amaya Gaming has expanded into several new gaming verticals, not the least of which is its burgeoning online casino operation.

But with most recent headlines focused on the sports betting beta, the imminent launch of a PokerStars-branded poker room in New Jersey and Amaya’s acquisition of daily fantasy sports site Victiv (reborn as StarsDraft), iCasino has gotten lost in the conversation.

Based on information gleaned from Amaya’s second quarter results summary, it certainly shouldn’t have been, as a PokerStars/Full Tilt-branded online casino may have the potential to generate more US-based revenue for Amaya than any other vertical.

PokerStars’ online casino is already big…

As of Q1 2015, online poker comprised approximately 95 percent of Amaya’s revenue.

By the time Q2 rolled to a close, that number slipped below 90 percent, with online casino accounting for 11 percent (C$36 million) of the operator’s total take. That represents a 78 percent quarter-over-quarter gain for online casino.

Granted, the surge was helped along by the implementation of slot and live dealer games toward the end of Q1, but that still doesn’t take away from the fact that Amaya has been extremely successful in selling its poker users on casino – so successful that roughly 320,000 users played online casino in Q2, equating to a 25 percent cross-sell rate of active players.

Yet, given Amaya’s immediate plans for online casino, these statistics may pale in comparison to what we’ll see in six months’ time.

…and will only get bigger

What’s truly remarkable about Amaya’s accomplishments in the online casino arena thus far is that the operator has managed to achieve significant market share in the absence of a:

  • Focused marketing campaign
  • Standalone mobile casino application
  • Web application
  • Large selection of slot games

If Amaya has its way, all of these glaring deficiencies will have been addressed by the time 2015 draws to a close.

Already the number of virtual slot terminals has been increased from approximately 25 at launch to nearly 80. The launch of a mobile application will be an even bigger boon for the operator, as will an advertising campaign that will potentially reach millions of PokerStars/Full Tilt registrants.

Taken together, it becomes difficult to envision a scenario in which the casino doesn’t grow at an expeditious clip.

Even Eilers Research, known as one of the more sobering (and accurate) voices with regard to the iGaming industry, appears to share this sentiment.

In its latest report on Amaya, entitled AYA: Analysis of Q2 2015 Results & Updated Outlook, Eilers has Amaya pulling in C$180 million in online casino revenue for 2015, representing a 10 percent increase over its original forecast.

Furthermore, the research firm has online casino generating C$334 million in just two years time, an 86 percent uptick over its 2015 projections.

Not bad, especially for a company that only offered online poker for its first 13 years in business.

US outlook

Prior to Black Friday, PokerStars and Full Tilt were the predominant names in the US online poker industry. But times have changed.

The duo has been absent from the US for nearly four and a half years, and in that time, many former online poker players have either graduated to live games or left the game altogether.

Contrast this to the situation in Europe, where according to Poker Industry Pro via PokerScout.com, PokerStars and Full Tilt now account for a combined 63 percent of dot-com cash game liquidity, and an even greater percentage on the tournament front.

What this mean is that Amaya’s casino product won’t be fighting the same uphill battle in the US as it is in Europe. If anything, poker and casino will enter on near-equal footing.

In the absence of a major shake-up, the first state where Amaya will establish a foothold is New Jersey.

There, the two existing operators that offer both poker and casino games (PartyPoker NJ and WSOP/888) generate more than twice the revenue from their casino products, and casino as a whole accounts for 85 percent of iGaming revenue.

Even the prospect of playing poker on PokerStars probably won’t resonate enough with NJ players to overcome such a divide.

Looking ahead, the situation grows more complicated once other states are considered.

Of the three major states currently considering online gaming legislation, two (New York and California) have introduced poker-only bills, with only Pennsylvania contemplating a full rollout. Online casino is also absent from the Nevada regulated industry.

What’s more, as states form interstate compacts with one another, it’s online poker revenue that will benefit from shared liquidity, not casino.

Thus, where Amaya generates the lion’s share of its US-based revenue long-term, will likely depend on three variables:

  • The number of states that legalize online poker vs. online gambling.
  • The total number of states that legalize online gaming in any form.
  • The percentage of the online poker-friendly population that has access to players from other states.

In either case, it’s very likely that in any individual state that legalizes both online poker and casino, Amaya will generate more revenue from spinning reels and table games of chance than Texas Hold’em and Pot Limit Omaha.

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