PokerStars Dominates Italy’s Declining Poker Industry

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Wednesday, October 8th, 2014 | Written by Charles Washington

While the Italian government has seen its profits from online poker decline since liberalization, the country’s biggest online poker operator, PokerStars, continues to dominate the industry and in August generated €34.7 million in revenues, up from the €30.7 million collected in July. PokerStars now accounts for almost 70% of Italy’s total iPoker market, compared to July’s figure of 61%.

Marketing the key to success

According to Italian poker journalist Claudio Poggi, PokerStars’ success in Italy is due in a large part to the site’s marketing initiatives, which leave the country’s other online operators far behind.

“[PokerStars] is perceived as the industry leader, and that’s why everyone goes to play there,” explained Claudio Poggi. “PokerStars also has a media exposure that other competitors do not have. Some of the other rooms have tried to fill the gap, but I think the difference between them and PokerStars was simply too big.”

Currently, PokerStars.it is ranked the world’s 7th most popular online poker room with a seven-day average of 1,350 cash game players, according to PokerScout. Furthermore, PokerStars’ tournament offerings are considered the best in the business and its tournament traffic numbers were given a further boost recently after the site launched its brand new Spin & Go product in Italy’s regulated market during the last week of August. The 3-Max Hyper-Turbo Sit & Go tournaments offers participants a chance to win up to 1,000 times their original buy-ins, and the exciting, lottery style game combined with effective marketing has ensured it has proven an instant hit with Italian poker players.

It has also helped put further distance between PokerStars and its nearest rivals, and as Poggi points out: “It would be good to see some proper competition heating up Italy’s poker market. Competition is always good for the players. Unfortunately, I don’t think we can blame PokerStars if there’s nothing at their level in Italy right now.”

Italy’s shrinking iPoker market

PokerStars may be celebrating its ongoing success in Italy’s poker market, but the industry’ as a whole continues to shrink and in August nearly €50 million in revenues were generated, representing an 11.7% contraction compared to the same month in 2013.

The decline Italy’s gambling industry has suffered over the past few years was even cited as the main reason Amaya Gaming’s other brand, Full Tilt Poker, would not enter the country’s regulated market some time in 2014, despite its former owners, The Rational Group, having applied for an online casino license to Italy’s gambling authority AAMS.

International liquidity may be the only solution

At the heart of Italy’s problem is the ring-fenced approach the country has adopted to online poker which, along with other EU nations such as France, Spain and Portugal, has ensured a less competitive environment for their players to enjoy. In this respect, poker is very different from other gambling games played against the ‘house,’ as poker is a peer to peer game which requires a significant number of players in order to be viable.

Despite the obvious need for these countries to revitalize their poker industries by combining resources and sharing their international liquidity, however, up until now the various countries have shown little appetite to make it happen.

Unlicensed operators costing €122m every year

Rather than Italy focusing on combining player pools with other countries, it has instead decided to concentrate its efforts on combating the legion of unlicensed operators that offer their products to its domestic players. According to Italy’s Finance Ministry, Pier Carlo Padoan, unlicensed operators could be costing the country up to €122 million each year in missed tax revenues, and so the government now plans to put in place a new set of measures highlighted in a 140-page report titled “Report on Tax Evasion.”

Included in the report is a plan to coordinate actions between other European member States and financial institutions to track and halt all financial transactions by companies operating without an Italian online gambling license. Such measures are seen by Italy’s Finance Ministry as important in limiting the risks of money laundering, whilst also ensuring a safe and secure gaming environment for Italian players. As Italy’s Finance Ministry, explains:

“The law enforcement operations against various illegal activities related to gambling.. aim not only to fight against tax evasion, but also to protect the market from the attempts of infiltration of organized crime, money laundering activities and at the same time protect consumers from unsafe and dangerous game offerings.”