Flutter Announces PokerStars Exit from Georgia Ahead of Massive Regulatory Changes
Posted on: February 22, 2022, 10:17h.
Last updated on: February 25, 2022, 07:07h.
Soon, it’s not going to pay to be a part of Georgia’s online gambling market. Flutter Entertainment realizes this, and will pull PokerStars out of the country as of next month.
At the end of last year, Georgia’s Prime Minister, Irakli Garibashvili, presented new legislation that will turn the country’s iGaming market upside down. The legislation was the brainchild of Georgia’s Minister of Finance, Lasha Khutsishivili, and will set an effective tax rate of up to 65%-70% for online gaming operators.
The legislation also requires the implementation of blocks to prevent anyone under the age of 25 from accessing online gambling sites. In addition, all forms of advertising – TV, outdoor, and web-based – are banned.
PokerStars Throws in the Towel
The new rules will make survival in the online gaming space virtually impossible. Flutter Entertainment is ready to pull up stakes, announcing to its Georgia users that PokerStars will go dark as of the end of this month.
Jim Dodge, a spokesperson for Flutter, confirmed via an email to Casino.org that PokerStars will leave the country. The decision is a direct result of the new regulations that are coming. Economic sustainability in a market with virtually no margins is impossible.
PokerStars has reportedly contacted all of its users in Georgia to inform them of the pending changes. However, they shouldn’t wait until the last minute before exiting the site and closing their accounts.
All PokerStars users will have to withdraw any held funds before March 1 to avoid the risk of losing the money. The operator will work with its customers in the country to settle any outstanding benefits, including bonuses and tournament repayments, that may be pending.
Flutter Not Giving Up on Georgia
Despite PokerStars’ retreat, Flutter will keep Adjarabet.com operating for now. Dodge confirmed that there are no plans to shut down the site, adding that it will “continue to offer its full range of products in Georgia.”
It would be difficult for Flutter to walk away from the online gaming platform at this time. As Paddy Power Betfair three years ago, it purchased a 51% stake in the company for $130.4 million.
At the time, Georgia was an “up-and-coming” star in the online gambling space. The market grew by 40% from 2016 to 2018, and was worth around $244.7 million at the time.
In 2018, Adjarabet was taking in pre-EBITDA (earnings before interest, taxes, depreciation and amortization) revenue of approximately $87 million. Buying into the company made smart financial sense at the time. However, no one could have predicted the regulatory flip that arrived at the end of 2021.
Flutter has the option to purchase the remainder of Adjarabet, per the terms of Paddy Power’s original purchase. However, based on what’s coming, the company may reconsider.
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