This week, Amaya finished its acquisition of Rational Group (the parent firm of PokerStars) to create the single largest online gambling company in the world. The company’s management must now go forward with their plans to bring the PokerStars brand to regulated markets throughout the world. However, this is proving to be a challenge. Although Amaya has already gained regulatory approval in countries like France, Greece, Italy, and Spain, the firm must first deal with PokerStars’s presence in gray and black markets before it can gain traction in countries like the UK and the US.
Although it still has plenty of work to do, Amaya has successfully implemented PokerStars in a number of regulated markets thanks to its already existing connections. Currently, a total of 11 regulated jurisdictions allow players to use the PokerStars services.
Perhaps the biggest victory occurred in Bulgaria, a country that has just barely started regulating online gambling in February 2014. Shortly after the acquisition was finalized, PokerStars gained approval from the Bulgarian State Commission on Gambling, making PokerStars.bg the first fully legal online gaming site for Bulgarian players.
A new market focus?
A large portion of PokerStars’s revenue has been from markets that have little to no oversight for online gambling, including markets where it is not clearly legalized. This is problematic for Amaya, who are interested in bringing PokerStars to heavily regulated markets that require strict compliance with various international gaming laws. A major example is the UK, whose Gambling Commission requires that operators make an extensive case if more than 3% of their revenue comes from countries where online gambling is not explicitly legal.
PokerStars could also face some trouble in the US. Legalized online gambling is still in its developing stages and it is still being handled on a state-by-state basis. A regulated PokerStars will likely be available to residents of New Jersey in the near future; however, underwhelming online gambling revenues in the state of New Jersey make entering Delaware and Nevada a far less appealing choice than simply keeping revenue coming from unregulated markets.
Handling the competition going forward
Amaya’s acquisition of Rational Group may have created the biggest online gambling company in the world, but other companies are following suit. Amaya will need to make some decisions soon in order to fend off up-and-coming competitors who are also seeking to get a slice of the growing number of regulated markets while expanding their portfolios of services.