Analysis: Equating Amaya’s numbers to the NJ i-poker market as i-gaming record is broken again


rStars is to join the New Jersey online gambling market next Monday at a time of growth, as the record for the monthly i-gaming revenue total was broken for the fourth consecutive month when February's total was released.

February’s $14.7m is up from January’s $14.6m and shows a year-on-year increase of 41%.

Of course, only so much can be read into the figures for the time being, as it remains to be seen what injection Stars and Full Tilt are to make to the market when they begin operating in the US for the first time in nearly five years next week.

While both Stars and Full Tilt are licensed to conduct online poker and casino operations in the state, one vertical clearly outperforms the other, with casino accounting for 81% of the revenue generated by the market since its launch in November 2013 with $249.3m and poker accounting for the other 19% with $60.2m.

This can largely be explained by the fact that only two of the five New Jersey i-gaming licence holders offer poker in the state, and as a partner of Amaya, Resorts will become the third licence holder on that list. It is not as though the New Jersey i-poker market has suffered a striking decline in its time in operation, but if the poker numbers were to be personified in the form of a line on a heart monitor, it is fair to say it would be time to call for Dr Baazov to come in and give the patient some much-needed CPR.

From May 2014 to February 2016, the monthly i-poker revenue figure has been somewhere between $1.7m and $2.3m, so seismic shifts have not been apparent, with i-poker’s record month coming in January 2014 with $3.4m.

Amaya vs New Jersey

Amaya, owner of the Stars and Full Tilt brands, said in its latest financial report that real-money online poker accounted for approximately 78% of total revenue of C$389.5m for Q4 2015, which would equate to C$303.8m, so US$226.8m.

For the New Jersey i-gaming market, overall poker revenue for the three months ended 31 December 2015 was approximately $5.9m, meaning that providing both Amaya and New Jersey continued on similar paths, Amaya would only need to make 3% of its overall online poker revenue in New Jersey to match the market’s quarterly performance on its own and double the overall market total.

For the first two months of 2016, Amaya estimates it generated approximate consolidated revenues of US$189m, with 75% of which coming from real-money online poker ($141.75m). In the same time period, the New Jersey i-gaming market made $4.2m, equating to 3% of Amaya’s total, so again, if both continue on similar trends, only 3% of Amaya’s online poker revenue would need to be made in New Jersey to double the market size.

It’s more difficult to look into Amaya’s casino figures, as casino was put into the same bracket as sports-betting revenue, which accounted for 17% of Q4 2015 revenue, and online sports betting is illegal in the US, so will not be part of the PokerStars NJ offering.

According to Online Poker Report, Stars generated $44.3m revenue in New Jersey from October 2006 to April 2011, when it was shut down on Black Friday, and as of Black Friday, there were approximately 75,000 Full Tilt accounts attributed to New Jersey residents, while Stars’ user numbers from that time have been redacted.

The soft launch of PokerStars NJ that begins on Wednesday may give an indication as to whether it can come close to seeing that same number of users in 2016, but if the 2006-2011 trend continues, Stars would make approximately $9.8m across both casino and poker in its first year in operation. The Stars and Full Tilt platforms are set to merge this spring.

Amaya said in the Q4 2015 report that the number of Stars’ real-money active unique players was 2.3 million for the quarter, so if we just look at the Full Tilt number of users in New Jersey as of Black Friday, this would make up 3% of the total using the Stars/Full Tilt platform worldwide, though the Amaya report did not specify user numbers for poker and casino separately and it is unclear how many Full Tilt and Stars players in New Jersey will return.

How will Amaya stack up against Borgata/Caesars?

Borgata, partnered with BwinParty and PalaCasino, leads the way overall in the New Jersey i-poker market so far, contributing $32.6m of the approximate $59.7m generated since its launch, giving it a 55% market share. For 2015, Borgata made $13.1m for poker. If Amaya’s Q4 2015 totals continued on a similar trend, it would need 6% of its poker revenue to come from New Jersey to beat Borgata’s 2015 total in just one quarter, and 5% of the total would need to be made to beat Caesars Interactive Entertainment’s (CIE) annual performance in one quarter. CIE, partnered with and owner of the brand, placed second last year with $10.7m.

There will obviously be factors beyond historical numbers, such as whether brand awareness increases and whether players can be retained after the launch, that will play a part in Amaya finding its space in the market. Tension in the industry is sure to build as the launch approaches.

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