PokerStars’ Parent Company Lost $26m in 2015

PokerStarsThe financial results for the Amaya Gaming Group were released for 2015, and it doesn’t look good for the parent company of PokerStars.

The parent company of PokerStars, the Amaya Gaming Group, has released their financials for 2015, including the disclosure of a $26 million loss for the year.

One of the most important companies in the online poker world right now is the Amaya Gaming Group. They purchased the Rational Group, the company that owned PokerStars and Full Tilt Poker, back in 2014 in one of the biggest business deals we’ve seen in the history of the industry. They immediately started making a number of changes, including many of which weren’t very popular with their players, and that leads us to this point in time: Their 2015 financials have been released recently, and they reflect a sizable loss of about $26 million for the year.

Revenue Breakdown

Here’s a quick breakdown of the numbers that you need to know to see the comparative picture between 2014 and 2015 for the poker giant:

  • Revenues were $1.4 billion in 2015 compared to $1.2 billion in 2014, for an 8 percent increase.
  • The net earnings were -$25.9 million in 2015 compared to $125.2 million in 2014.
  • They managed to lower their total debt by a total of $569 million in 2015.

This last number is the one that is particularly important right now because of the huge amount of debt they took on from investors for the roughly $5 billion deal that saw them take over PokerStars and Full Tilt Poker in mid-2014. With that still being the case, to have a drop in around $150 million in net earnings from one year to the next is a pretty significant number.

Long-term Strategies That Affect US Players

What you have happening right now with Amaya is something that’s very important for US online poker players for a few reasons. First, the issues with daily fantasy sports, which are tied in with a lot of the same legal ramifications as online poker, are related because they purchased a daily fantasy sports company and rebranded it StarsDraft in 2015. This brand was promoted to US players from their existing database of those who played on the PokerStars and Full Tilt Poker brands before the Black Friday event on April 15, 2011 (the day, ironically enough, that tons of players were filling their taxes from having played on those sites in the previous year).

Second, they are approaching poker with a business strategy that other companies are sure to copy if they see the results they’re hoping for. They’ve added in daily fantasy sports opportunities, sure, but they’ve also added casino games from software companies like Net Entertainment (one of the top names in the business).

This is reflected by the fact that only 78 percent of their fourth-quarter revenues came from online poker in 2015, and this is compared to an incredible 93 percent for the same period of time in 2014.

In short, they’re using their existing base of players, even those who were from the United States, to push players off to other types of gambling. This has the disadvantage of drawing money away from the current pool of recreational poker players (of which there aren’t that many these days). On the other hand, it has the advantage of potentially bringing in more recreational players who are attracted to the fact that a site like PokerStars would offer more than just poker, which many have become jaded against after losing several deposits without ever coming out on top.

Following the Lead of the Industry Leader

Like it or not, Amaya is the industry leader at this point in time, and companies that hope to keep online poker alive in the United States are going to look to that industry leader to see how to maximize profits after several years (nearly a decade) of decline for the online poker sector. While Amaya’s rake increases, addition of casino games, push for daily fantasy sports with StarsDraft, changes of terms with affiliates and complete pull of SuperNova Elite benefits without warning have all made them unpopular with figures in the online poker community, the facts of the matter are that they’re still on top, they’re going to stay on top for the foreseeable future, and other companies (including US-facing ones) are going to follow their lead if they want to survive.