European Online Poker Is Transforming, And PokerStars Is Set To Reap The Rewards

Summary

• The Stars Group is in a unique position to benefit from the combining of online poker player pools in France, Italy, Spain, and Portugal.
• Improvements in these markets will have a significant impact on the company’s bottom line.
• CEO Rafi Ashkenazi indicated that the company is “quite excited” about the prospects during the recent Q2 earnings call.

In July 2017, the regulatory authorities in France, Italy, Spain, and Portugal came together in Rome to sign a historic accord that has been in the making for half a decade. The impact of the agreement will shake up the online poker industry, improving the market conditions in some of the largest markets in Europe.

Over the last decade, online gaming regulation has proliferated across the globe, creating an environment for consumers to responsibly engage in online gaming with the safeguards and checks in place to help protect those at risk. In many jurisdictions, sensible and measured rules have created competitive online gambling markets that have allowed companies to flourish while affording more protection to consumers.

In online poker, many countries, including the UK, Denmark, Belgium, and Bulgaria, allow operators to share player pools between countries. This means that a player in the UK can play against someone in Denmark, Argentina, Canada, and the rest of the world.

Having access to a global player pool means that more games run around the clock, and operators can spread bigger tournaments, resulting in a more appealing product for consumers, thus channeling more players to regulated sites. It also leads to a much more competitive business marketplace, allowing small operators to build a reasonable liquidity pool across multiple jurisdictions.

However, the regulations in Spain, Italy, and France are unique in that they do not allow this form of cross-border shared liquidity. The closed system adopted in these countries has resulted in declining online poker revenue, lower channelization, and less competition. Portugal, which only passed online gaming regulation in 2016, adopted the same model as its Iberian neighbors.