PokerStars Looking at Lucrative Indian Market in Light of Australian Legislation

When Minister for Communications Mitch Fifield introduced the Interactive Gambling Amendment Bill (IGAB) of 2016 into Australia’s Parliament on November 10, the outline for online poker players Down Under was clear.

Under the provisions of the IGAB, which serves to supplement Australia’s existing Interactive Gambling Act of 2001, the only online gambling activity that would remain protected as a legal pursuit would be sports betting. Online poker rooms, along with casino-style games, lotteries, and other activities involving wagers on contests of skill and chance would be classified as illegal should the IGAB pass through Parliament.

And with that passage considered imminent, due to the ascendancy of anti-gambling Senator Nick Xenophon to the role of parliamentary “kingmaker” in Australia’s recent elections, PokerStars – the worldwide leader in online poker services – has been forced to reassess the company’s viability in the Australian marketplace.

Per a statement released by Minister for Human Services Alan Tudge, a staunch ally of the so-called Xenophon Team, the IGAB is constructed to clamp down on current violations of Australian law while strengthening consumer protections:

“Currently hundreds of illegal gambling services are easily accessible on the internet and we know that people are more likely to get into trouble online – 2.7% of interactive gamblers are problem gamblers compared to 0.9% of all gamblers.

We expect online wagering providers to meet community expectations. The tougher laws will seriously disrupt illegal offshore providers from acting unscrupulously or targeting vulnerable Australians. The government is committed to taking tougher action against illegal offshore wagering providers and this bill does exactly that.”

In response, PokerStars CFO Daniel Sebag was wary when appraising the Australian market during a recent conference call with shareholders to discuss third-quarter earnings:

“We continuously monitor the regulatory environments of the countries in which we currently operate and in which we hope to operate.

In Australia, we currently offer poker and are reviewing the applicability of proposed legislation to player versus player games of skill. At this time, it would appear likely that if the legislation passes, we would block players from Australia. As we do not offer casino sportsbook in Australia, it currently contributes to about 2.5 percent of our revenues.”

If the company was so inclined, PokerStars would eventually be able to apply with Australian regulators as a licensed offshore sportsbook provider, with no poker room component, but Amaya executives appear to be considering alternatives.

PokerStars CEO Rafi Ashkenazi issued a statement to shareholders in which he outlined the company’s planned pivot from Australia to India:

“India could be a greater opportunity compared to Australia, and when we look at the player base it would be a bigger one. However, from the purchasing power point of view, India is quite different from Australia.

We estimate the market in India to be anywhere between $80 million to $150 million a year. So, it will be bigger than Australia eventually, of course. But it will take time to build up this level of revenues from India.”

The Indian launch isn’t expected until the middle of 2017, but considering a recent report by the India Times which found that over 50,000 players there are currently using startups like Adda52, Poker-Baazi, and Spartan Poker, that conservative timeframe could certainly be accelerated.