Macquarie Research Assesses Amaya’s Place In The iGaming Industry

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Tuesday, September 1st, 2015 | Written by Shane Larson

There is no doubt Amaya Gaming has great appeal, with its leading brand PokerStars boasting an incredible 91 million strong user base, making it by far the largest, most popular platform in the whole online poker industry. Together with the company’s other poker brand, Full Tilt, the two sites currently account for around two-thirds of the world’s regulated iPoker market, giving Amaya a stranglehold over the whole industry. Furthermore, recently the company has started diversifying its products into the Casino, Sportsbook and Fantasy Sports markets, and according to a Macquarie Research, Amaya is well on its way to generating more than $1.35 billion in annual revenue by 2016.

What people do debate, however, is whether or not it’s accurate to consider Amaya Gaming an online gambling business at all, and just what is the future growth potential of the business. In fact, Macquarie Research recently released their coverage initiation on the company entitled “Amaya: Sitting at the big boy table,” which is adding major fuel to the fiery debate of whether Amaya is actually a business-to-consumer (B2C) Internet company, or even truly representative of a company in the online gambling industry.

What the Report Shows

Macquarie Research touts Amaya’s ability to scale, premium content and liquidity in their report, stating that the company is positioned to grow. Still, the report reveals that the only vertical that the company is currently dominating is online poker. While the Canadian company’s PokerStars and Full Tilt sites have a 66 percent global market share, the company has yet to gain a footing in other aspects of the online gaming industry. In fact, about half of all players who use PokerStars are actively turning to other iGaming sites for casino and sportsbook gambling.

Diversifying Into Other iGaming Areas

Although it’s clear that Amaya hasn’t yet fully broken into every niche of the iGaming industry, the Macquarie Research reports is optimistic that the company is poised to do so in the near future. It points out that Full Tilt added a casino during the first quarter of 2014 and expanded into table games in the second quarter of the year, while PokerStars introduced casino games earlier this year. A sportsbook also debuted on PokerStars this past April, and Amaya recently purchased daily fantasy sports (DFS) operator Victiv, and it plans to have its fantasy NFL football realm up and running within the next few weeks to coincide with the season this year. As an Amaya’s press release stated this month:

“The current Victiv team will manage the DFS business, which will be rebranded StarsDraft and will be initially launched at StarsDraft.com in select U.S. markets and later through the PokerStars platform.”

The Future of Amaya

Considering all of these positive steps to expand its reach, Macquarie Research estimates that Amaya will easily capture 3 to 5 percent of the market share for both casino games and sportsbook. This could potentially lead to Amaya doubling its revenue, and increasing its EBITDA to nearly $1 billion by 2018. As a result, Macquarie Research puts Amaya in league with Internet companies like Instagram, Netflix and Zynga, which are of similar size to Amaya.

Opposing Views

While it’s clear that Macquarie Research is impressed by what they see at Amaya, not all analysts are viewing the company’s future through glasses that are quite as rosy. Eilers Research estimates that Amaya will only grow their revenue by 1 to 2 percent through 2016 and then suffer a dip in revenues the following year. The company preferred a more conservative analysis due mostly to concerns that Amaya may actually lose some brand strength by delving into other markets, and that there has been an overall reduction in the size of the online poker market over recent years. The first half of 2015, for instance, has seen global online cash game traffic plummet by 22.4%, and furthermore the US has just three regulated markets, with no other state having adopted iPoker regulation since 2013.

So is Amaya going to become another huge B2C Internet company success story? Will it survive an expansion to offer a fuller range of iGaming options and services? Only time will tell, but it is clear that Amaya Gaming is going to remain a ‘One to Watch’ as they approach the Big Boy Table.