Amaya Posts Record Revenues in 2016

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Friday, April 7th, 2017 | Written by Charles Washington

Amaya, the owner and operator of PokerStars, has released its earnings information for 2016, shocking industry experts by outperforming predictions. Compared to 2016, business was up by 7.8 percent with the company generating $1.15 billion in revenues. That made 2016 a record year, with much of the success owed to a fourth quarter performance in which adjusted earnings increased by 17.8 percent. Commenting on the impressive financial results, Amaya Chief Executive, Rafi Ashkenazi, stated:

“Our proactive changes to the poker ecosystem and customer acquisition initiatives continue to reverse certain negative trends and we are starting to see organic growth in that business, our casino offering exceeded expectations as we introduced limited marketing campaigns and focused on our cross-sell efforts, and we continued to build and develop our sportsbook.”

Poker Revenues Flat

With such positive numbers coming out of the Canadian company, one would think that online poker must be back and bigger than ever; however, that is not the case. During the fourth quarter, online poker revenue shrunk by 5 percent to $217.2 million. When you compare 2015 and 2016 revenues, it’s clear that online poker is becoming less and less the cornerstone of PokerStars, with poker revenue only accounting for 70 percent of total earnings during the fourth quarter, compared to 2015 when three-quarters of revenue came from online poker.

Sports and Casinos Drive Success

Sports betting and casino games are what’s really driving the success of Amaya. Combined revenues from the two verticals were $80.2 million last year, marking a 59 percent increase compared to 2015. Roughly $73 million of that total came from casino games, and what’s clear is that Amaya is allowing its online poker games to be cannibalized by casino games by taking steps to encourage players to step away from the virtual tables to play slots and other games. While the number of casino game users increased by 47 percent in 2016, the huge uptick in casino gaming could not come from new players alone.

Developing All Round Gaming Platform

So why is Amaya shifting its focus to casino gaming at the expense of online poker? It’s clear that Amaya is implementing what many other operators have already discerned, namely that online poker simply isn’t as profitable as online casino games and sports betting. With gaming expansion slow going in the United States and markets highly fragmented throughout Europe, poker revenues are limited. As a result, Amaya has focused on developing a comprehensive platform of casino games and adding them to PokerStars.

Recreational Poker Players a Priority

Amaya hasn’t forgotten about online poker entirely, but the company has become more strategic with its marketing in order to reduce costs. Furthermore, it did roll out a brand new PokerStars tournament series with the emphasis placed on the recreational player sector, which is where it believes it has the greatest potential for growth. In addition, Amaya spent 2016 revisiting its operations in countries known as gray areas, places where online poker is not illegal but is not regulated either.

This was done in an effort to improve the company’s image and avoid being labeled a “bad actor” in countries and states that are currently considering online poker legislation. PokerStars also entered the newly opened legal online poker markets in Portugal and the Czech Republic this year.

Looking Ahead

Most industry experts believe that 2017 will be much the same as 2016 with revenue growth coming predominantly from online sports betting and online casino games. Commenting on the company’s impressive results, Chief Executive Rafi Ashkenazi, stated:

“The strong performance of our business has helped us to reduce our currency risk, lower our interest expense and accelerate the payment of the remaining amounts owed on our deferred payment obligation, all of which will allow us to continue pursuing our four strategic priorities. We expect to continue our 2016 momentum and execute on our strategy in 2017.”

These goals include (1) growing its online poker leadership position; (2) become an online casino leader (3) developing a competitive online sportsbook, and (4) achieving a streamlined and efficient operation. PokerStars is also focused heavily on lobbying in the U.S. in an effort to expand online gambling legalization, and bring all of its verticals to new markets across the United States.