Oct 31, 2014
3 Reasons PokerStars has Instituted Huge Changes
By RTR Dennis
What a good time for the Scheinberg's to have gotten out of the online poker industry, huh? Ever since the Scheinberg family sold PokerStars to Amaya Gaming for $4.9 billion, the world's largest poker site has gone through vast changes, some of which have been unpopular. Below you can see what's changed, or at least intensified, in the aftermath of the June sale.
- Bigger focus on recreational-friendly products like Spin & Gos, casino games.
- Reducing the roster of sponsored pros.
- Reducing rewards for SuperNova Elite players.
- Charging currency fees for withdrawals.
- Ending agreements with smaller affiliates.
Is all of this due to Amaya's takeover? Perhaps Amaya brings a slightly different philosophy from a business standpoint, but external factors within the industry are forcing many of these changes. That said, let's discuss a few reasons why Stars is shaking things up right now.
1. Recreational Players are harder to come by
We'll start with the most-discussed and obvious point first, recreational players aren't flowing into the game as frequently these days. There's no Moneymaker Boom, federal US regulation or other godsend around the corner for the online poker market. So PokerStars and others are putting more time into develping games, features and rules that cater more to recreational players. Sure mid and high stakes players are important to the game's overall ecology. But the industry's focus is clear: recruit and keep recreational players around.
2. Licensing fees and taxes have increased expenses
Many online poker sites benefited from the mostly lawless structure surrounding online poker in the past. Going further, they could serve countries like the US without having to pay taxes on profits or obtain licensing. This has changed greatly today since France, Italy, Spain, the UK and other countries have regulated iGaming markets. The days of reaping billions in untaxed profits are over, so PokerStars has reacted. This means paying taxes, adhering to stricter standards and buying licenses in each regulated country while cutting expenditures such as sponsored players and charging currency fees on cashouts.
3. Grey Market profits have dried up
Along with paying more taxes and getting licensed in regulated countries, Stars no longer pulls in easy profits from grey markets. In fact, they exited over 30 grey-market countries in early October just to make sure they were playing by the rules. This is just one more area that has squeezed the giant wallet of Amaya/PokerStars, so they're constantly looking for ways to save money and pull in more revenue.
So far, some of the changes going on at Stars have been unpopular with many parties. Pros dislike recreational-friendly products like Spin & Gos along with the reduced rewards for SuperNova Elite players. Just about everybody hates the currency fees being charged. Certain affiliates have of course lashed out at being dropped by PokerStars. But unfortunately, this is a business and Stars will continue to change with the times and do what they think best increases profits margins over time. And it's likely that in the long run, all of these different measures will appeal to a wider range of poker players.