The Stars Group, parent company of PokerStars, reported its second quarter results this week. In what the poker world is wondering if it is a sign to come, the percentage of poker as a portion of revenue compared to the rest of the company sharply decreased. Sports betting took over as the top vertical in the company, though overall, sports betting, casino, and poker are all bunched together.
On the second page of its press release, The Stars Group said that sports betting made up 36 percent of the second quarter’s revenue. Online casino games were second at 31 percent, while poker came in third at 30 percent. In the same quarter last year, the numbers were 20 percent, 25 percent, and 53 percent, respectively.
While that drop from 53 to 30 percent is jarring, it is not as bad as it seems for poker. The company said that overall revenue, which increased by 55 percent quarter over quarter, was affected primarily by the July 2018 acquisition of Sky Betting & Gaming. Sports betting naturally swelled as a result and PokerStars’ portion of the pie deflated.
The Stars Group is definitely banking on sports betting to be a growth driver in the near future. In May, it booked a deal with FOX Sports to create FOX Bet, a real-money and play-money wagering platform. It also, just last month, inked a huge deal with Penn National Gaming in which The Stars Group will gain online sports betting access in up to ten states in which Penn National has brick-and-mortar casinos.
Looking at the company’s “international” poker revenue numbers, they decreased by 11.7 percent from the second quarter of 2018 to the second quarter of 2019, dropping under $200 million. It seems that The Stars Group does not feel this is a particularly bad sign, pointing to external factors:
Poker revenue for the quarter decreased year-over-year primarily as a result of adverse foreign exchange fluctuations and continued disruptions and regulatory headwinds in certain markets, including reduced deposits by customers as a result of local restrictions on some methods of payment processing and on certain methods of downloading The Stars Group’s poker applications, which was partially offset by continued organic growth in most other markets.
“2019 has been and remains a year of integration, execution and debt reduction,” said The Stars Group’s Chief Executive Officer Rafi Ashkenazi. “We are committed to those key strategic priorities for the rest of the year while we also build our foundation and momentum to become a market leader in the U.S. We are confident that the actions we have taken over the last year, and are pursuing now, including to reassess our fixed cost base, put us in a strong position to deliver our mid-term growth targets from the end of 2019.”
Now that half the year has elapsed, The Stars Group has adjusted its financial forecasts downward, citing, “negative foreign exchange fluctuations, a historically low Betting Net Win Margin in the first quarter for the United Kingdom segment, the slower than planned recovery in certain disrupted markets and some delays in launching The Stars Group’s newly licensed operations in certain jurisdictions, such as Switzerland.”
