Thread by @pokerprojones

Especially relevant with today's news that GG's relationship with the WSOP extends: These are my main takeaways from Flutter's Q3 financial results this week as it pertains to poker (thread 👇)

pokerindustrypro.com/news/article/2…

So the headline figures:

- PokerStars division (includes sports + casino) flat YoY
- in constant currency, up 5%
- The "gaming" segment (casino + poker), up 6% cc

However, in that, they reported (only in relative figures, in cc)
🎲 casino +32%
🏅sports +3%
🃏 Poker -10%

So as they quickly pointed out, this is "returning to pre-Covid run-rates." Which is accurate. Pre-flutter, online poker at TSG has been down 10%+ every quarter since Q4 2018 (black line in chart below)

So far, so standard, but it is somewhat surprising because traffic figures show some decent residual growth in Q3 for most operators, in most markets.

We touched on some of this in this pokerfuse article from earlier this week.

pokerfuse.com/news/poker-roo…

Looking at Q3 as a whole, dot-com market is up around 20% year-over-year. A lot of this is the explosion from GGPoker, which has tripled in size in the last year (⏩ foreshadowing!), but other operators have benefited too.

PokerStars is +13% in cash games in this period 👇

And that is for cash games. Q3 jumps out as a very tournament-focused period. It was the time of the GG WSOP, partypoker WPTWOC, and for PokerStars it ran:

- $50M Stadium Series (July)
- $100M WCOOP (Sept)

So, even though no one expected the *doubling of revenue* observed in Q2 to extend into Q3, obv, it is a bit disappointing that net gaming revenue is negative in online poker.

pokerindustrypro.com/news/article/2…

Indeed, it was the first question posed during the Q&A - why are you down when we see the market up? (smart investor there, clearly with their eyes on PRO Data).

So there was a bit of discussion about extra AML/RG stuff, and market withdrawals (remember, September the exit from China), but two main things were put forward:

- Increased marketing spend
- Competition from GG/WSOP

pokerindustrypro.com/news/article/2…

Re. the marketing spend - all the numbers are NGR - net of promotions/rewards/VIP, and according to them, there was an appreciable increase of this in Q3.

Group CFO was explicit on this on the call, saying GGR trend was better than NGR "given uplift in promo spend."

Remember, this was signaled back in August, when Jackson said: “Customer generosity … has reduced significantly over the last five years" and suggested a change in approach in how much it rewarded players in poker and other PS verticals.

pokerindustrypro.com/news/article/2…

So what did we see in Q3? Certainly no big overhaul of its rewards program, which some players might have hoped to see. Anecdotally, I think we saw some generous offers targeted to certain players to reactivate.

We did see The Vault, though this is hardly a huge shift in how PS has done poker promos in the past.

I think by far the biggest was the spend for Stadium Series and (to lesser extent) WCOOP. There were big giveaways here, but also - a lot of overlays.

pokerindustrypro.com/news/article/2…

Always worth remembering that before this year, PokerStars basically didn't do overlays. WCOOP 2019 missed by a sum of something like $30k while paying out over $100 million.

This year, we had:
- $2.2 million in misses in Stadium
- $800k in WCOOP

This leads us nicely in to the second reason given for the declining revenue in Q3 - competition, and specifically the World Series of Poker (named explicitly) and GGPoker hosting their WSOP Online (only a nod to implicitly)

Jackson's words: “One of the things you have to remember in quarter three—and this is true for poker generally—is the events that drive quite a lot of activity around poker are driven by global competitions which different operators get behind.”

“The World Series of Poker, which was obviously quite an important driver of volumes in the third quarter occurred, with a different timing to last year—and that’s not something that we run."

"One of our competitors has that, which had an impact on our performance relative to other players."

I don't think I've ever heard a TSG exec (or any exec for that matter) get this close to mentioning GGPoker by name, and the impact they are having on the industry.

It really underscores how competitive things have got in the last year.

Remember, when GGPoker inked the deal with WSOP back in April to host a Circuit series, we were only just starting to grasp what the coronavirus might mean for poker.

pokerindustrypro.com/news/article/2…

Back then, this was prior to UK lockdowns, though we were seeing live events get cancelled. We knew that WSOP deal was a game changer, but I don't think anyone knew quite what an impact it would have.

But then April-May-June happened, the world completely changed, and GG extended that partnership to host the GG WSOP 2020:
- 54 bracelet tournaments
- $84 million in prize money
- $7.4 million in rake

And that's not counting any of the side events etc.

pokerindustrypro.com/news/article/2…

So, how will PokerStars keep fighting back for mind-share in Q4? The company talked about continued investment in marketing spend and promotions. They recently launched a global TV marketing campaign + been a big promo push so far.

pokerindustrypro.com/news/article/2…

Obviously it's important to keep in mind that:

- They still have 50% more cash game players than GG
- Their software platform remains best in class in many ways
- They offer best spread of games
- They are in the most markets in both shared player pool + closed liquidity markets

I also believe they are still best-in-class when it comes to live-streaming production.

We're doing a great series on PRO on this at the moment, talking to the top brass at PS on their efforts. Here's a good starter from a thread yesterday 👇 from @SamBevington

https://twitter.com/SamBevington/status/1326930253596553216

But there's now no doubt that PokerStars clearly see GGPoker as their biggest existential threat at the poker tables, and they are committed to spending more to compete head-on.

With GG just announcing another WSOP tie-in Main Event in December, it will be fascinating to watch this all unfold.

They fended off partypoker 2-3 years ago against their massive spend-to-acquire strategy. Can they stay top dog in 2021?