As Australia seeks to find ways to gain control of its massive gambling industry – one that is frequently cited for enabling a greater rate of gambling addictions than in other market – offshore betting companies are keeping a watchful eye on events unfolding in Australia.
The parent company for Poker Stars, Amaya, is one such company. In a Q3 earnings call on Friday, Amaya CFO, Daniel Sebag, confirmed speculations that Poker Stars will very likely stop doing business in Australia in lieu of the Interactive Gambling Amendment Bill 2016 being approved.
Although not yet approved, the bill stands a good chance of being signed into law, thereby turning Australia’s online gambling market from grey to black. The bill, which was introduced by Australia’s Minister of Human Services, Alan Tudge, calls for amending current sports betting regulations to explicitly prohibit all other forms of online wagering.
While Amaya’s Poker Stars-themed sports betting site, BetStars, could theoretically apply for a license in Australia under the new amendments, the online sports betting market in Australia is highly competitive and already flooded with sports betting sites.
Poker Stars, however, would simply have no choice but to exit the Australian market if the Interactive Gambling Amendment Bill 2016 is passed. Licensing agreements in other markets, such as New Jersey, mandate that operators must not offer services in markets where online gambling is illegal.
In Amaya’s earnings call, Sebag revealed that Australia currently accounts for 2.5% of Poker Stars revenue – an amount, that if lost, would likely reduce the company’s EBITDA margin by 150 basis points. While not a huge loss, it is not favorable news considering that Poker Stars 2016 revenue is down 1% from 2015.
Sebag reassured investors that the decline, which was primarily due to losses in the French market, continues to be offset by increased rake fees, the launching of Poker Stars in New Jersey and changes to it’s loyalty program – the latter of which has stirred up resentment from some of Poker Stars biggest players.
Additional poker revenue hindrances cited by Sebag include the devaluation of the British Pound, less activity at Amaya’s Full Tilt poker room and cannibalization of Amaya’s real money online casino games.
While it will certainly show that Amaya does not need Australia, per say, to pay its bills, i.e. Millions in ongoing payments to Poker Stars former owner – Rational Group – the online gambling giant will nonetheless be forced to find additional ways to improve revenue gains in order to keep investors happy.
Regarding Australia, passing the Interactive Gambling Amendment Bill may appear to be a way forward in getting a better hold on its seemingly out-of-control gambling obsession. Or, it’s just a coverup to keep land-based pokie operators and their lobbyists happy. The bottom line is that going the route of making at least half of its online gambling market illegal is more likely to be a disservice to those Australians who will find a way to gamble online at any cost – even if it means spinning the reels at an unlicensed offshore operator.