PokerStars Likely to Pull Out of Australia

Amaya CEO Rafi Ashkenazi believes that a move into India would offset the likely loss of Australia, although it will take time to grow the market. (Image: LinkedIn)

PokerStars may withdraw its services from Australia in the wake of a new law that will transform the country from a gray to a black market, Amaya CFO Daniel Sebag said this week.

PokerStars is eager to keep its nose clean in order to protect its licenses around the world. But the introduction to the Australian parliament last week of the long-awaited amendment to the country’s 2001 Interactive Gambling Act would make it illegal for the site to operate there.

The act will offer legal clarification that only operators holding a license in Australia can offer their products to Australians. Amaya will be unable to apply for a license for PokerStars because online poker, unlike sports betting, has never been legalized in the country.

“The government is committed to taking tougher action against illegal offshore wagering providers and this bill does exactly that,” said Minister for Services Alan Tudge last week.

Black is the New Gray

Some licensing jurisdictions, such as New Jersey, tolerate operators who operate in gray markets but have made it clear that black market operators will not be condoned. Considering the lengths PokerStars went to in order to receive New Jersey licensing, it would be unlikely that Amaya would imperil its precious foothold in the US.

Gray markets refer to countries where unregulated online gambling is nominally illegal, but governments haven’t passed laws specifically forbidding it, while black markets, of course, have passed such laws.

“In Australia, we currently offer poker and are reviewing the applicability of proposed legislation to player versus player games of skill,” said Sebag during a recent earnings call.  “At this time, it would appear likely that if the legislation passes, we would block players from Australia, as we do not offer casino sportsbook in Australia.

“It currently contributes to about 2.5 percent of our revenues and we estimate it could reduce our EBITDA margin by up to a 150 basis points.”

India a “Greater Opportunity”

But Amaya CEO, Rafi Ashkenazi, says that the loss of Australian customers would largely be offset, eventually at least, by its planned move into the Indian market, which is expected in the first half of 2017.    

“India could be a greater opportunity compared to Australia, and when we look at the player base it would be a bigger one. However, from the purchasing power point of view, India is quite different from Australia,” said Ashkenazi.

“We estimate the market in India to be anywhere between $80 million to a $150 million a year. So, it will be bigger than Australia eventually, of course. But it will take time to build up this level of revenues from India,” he added.

A recent cull of 86 percent of rupees in India’s currency circulation, which immediately impacted live casinos in Goa, is not expected to have long-term implications for online operators.