The Stars Group Reports Increased Q2 Revenue

The Stars Group was long-associated with PokerStars, the world’s most recognisable online poker brand. But as the Toronto-based company has grown, especially with the Sky Betting & Gaming acquisition, its focus has shifted to overall gaming growth.

Poker is now a much smaller percentage of The Stars Group overall financials than it was in the past. In fact, sports betting and online casino have increased to nearly-equal status.

And with the reporting of The Stars Group’s second quarter 2019 results, the company shows that it is on the right track.

Overall The Stars Group Q2 Results

This week, The Stars Group reported its results for the second quarter of 2019, which ended on June 30.

The company gives much credit for a revenue increase to Sky Betting & Gaming, which was acquired in July 2018. Overall, the company’s revenue verticals have changed significantly:

  • Sports betting = 36% of revenue (was 20% in 2018)
  • Online casino = 31% of revenue (was 25% in 2018)
  • Online poker = 30% of revenue (was 53% in 2018)

Locally regulated and taxed markets also recorded a significant increase of consolidated revenue. It now stands at 79% versus 61% in 2018.

Quarterly revenue came in at US$637.6 million, which was up 55%. Operating income was listed as $94 million, up 8730%. And net earnings were $4.6 million, up significantly year-on-year from a losing total of $154.8 million in 2018. According to The Stars Group CEO Rafi Ashkenazi:

“The second quarter underpinned the success of last year’s acquisitions, particularly with the record performance of Sky Betting & Gaming and our increasing product and geographic diversification, as we continue to transform and position the business to execute on our strategy for strong, sustainable future growth.”

Ashkenazi added that this year is one of integration, execution, and debt reduction.

The Stars Group reduced its guidance for revenue and earnings for the full 2019 year. This was mostly due to reduced UK betting and increased expansion costs in the US. Meanwhile, Ashkenazi remains confident in overall annual growth:

“We are confident that the actions we have taken over the last year, and are pursuing now, including to reassess our fixed cost base, put us in a strong position to deliver our mid-term growth targets from the end of 2019.”

US Market Updates

As the Pennsylvania market awaits the launch of online poker and casino games from The Stars Group, the company is also working on its presence in more states. A recent agreement with the Akwesasne Mohawk Casino Resort in New York will give its sports betting brand a leg up on its competition. In addition, The Stars Group’s deal with Penn National Gaming puts the company in play in up to 10 states.

Moreover, The Stars Group’s aggregate market access is now up to 20 states as it awaits new laws and regulatory approvals.

Its other presence in the US is FOX Bet, a result of the partnership between The Stars Group and FOX Sports. This puts the companies together for as long as 25 years for real-money and free-play online games. FOX Bet is on schedule to launch in some states before the 2019-2020 season begins for the National Football League (NFL).

The Stars Group Management Additions and Changes

The last quarter was a whirlwind of changes at The Stars Group. The most significant addition, however, was John Schappert to the Board of Directors. He took the position of Independent Director and a member of the Compensation and Technology Committees this week.

Schappert also serves as the Chairman of Motorsport Games and Pipeworks Studios, both video game companies. And his past includes a time as COO of social gaming firm Zynga and for Electronic Arts, as well as Corporate VP of Microsoft’s Interactive Entertainment company.

Speaking of the Technology Committee, it is a new addition to the Board’s responsibilities and will focus on technology-related risks and the role of technology in the company’s business strategy. That committee began functioning on August 8, and Schappert joined Eugene Roman and Mary Turner in that group.

On the international scene, The Stars Group appointed Gino Appiotti as President of the International segment of the company after having served most recently as the Managing Director of Poker. He has been with The Stars Group since 2011.

Severin Rasset was promoted from Director of Poker Innovation and Operations to Managing Director & Commercial Officer of Poker.

Other promotions include Asaf Noifeld from Director of Casino Product to Managing Director of Casino, and Bo Wanghammer from Noifeld’s new role to a broader international strategic advisory role.

Poker Takes Back Seat to Other Verticals

The Stars Group has made no secret of downgrading its focus on its online poker vertical. It has done so while increasing the importance of other forms of online gaming, most significantly sports betting.

Poker’s sustainability has decreased due to an unstable regulatory environment in many markets around the world. Those regulations have subsequently fed into the reduction of deposits by customers in many of those markets. Payment processing has become more difficult, as have software downloads.

Meanwhile, new products in the online casino vertical have attracted fresh customers and revenue. The opening of new markets has also aided in its growth.

Jennifer Newell

Jennifer Newell

Jennifer Newell has been writing about poker and gambling since 2004. From her days in the WPT offices to covering summers of WSOP tournament action, she also followed gambling legislation to Washington D.C. and women-only poker to the Bahamas. Meanwhile, she lived in Los Angeles and Las Vegas for many years before moving back to her hometown of St. Louis, Missouri. Now, Jen travels less, writing about poker and online gambling from her home with her two dogs watching her every move. In her spare time, she follows politics, works on her never-finished novels, and learns Italian in the hopes of retiring to Italy someday.

If you want to know more, you can follow Jen on Twitter @WriterJen


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