Baazov Says PokerStars Daily Fantasy Sports Should Be Ready in Late 2015, in Time for NFL Games
When Amaya Gaming’s David Baazov made an earnings call earlier this week, much of the attention was on the revenues the gaming software company made from its PokerStars acquisition. Baazov’s announcement that PokerStars was getting into the daily fantasy sports market received much less attention.
That announcement could send huge reverberations through the traditional online sports betting industry and the newer Internet daily fantasy sports niche. It is hard to gauge how far-ranging such a move would be, but it could influence other gaming companies to get involved, should impact the current DFS landscape, and open up whole new revenue streams for the world’s #1 poker website.
Exploiting PokerStars’ Brand
Mr. Baazov said last summer when he purchased Rational Media, which owns PokerStars and Full Tilt Poker, that he wanted to exploit Rational’s most famous brand name to increase revenues. Most people assumed Baazov meant he would parlay the PokerStars brand into a first-rate online casino and sportsbook empire. When PokerStars became more aggressive in its live poker tournament sponsorships and began discussing deals with other traditional gaming companies, it only confirmed those beliefs.
No one discussed the idea that the PokerStars franchise would become a major player in the one-day fantasy football and baseball markets. If PokerStars enters the market on its own, it could become a pivotal third entry in what has been a two-contestant race so far between DraftKings and FanDuel. Those two companies have been bringing in an impressive array of investors over the past year. In the summer of 2014, FanDuel collected $86 million in investments from corporations such as NBC and Comcast. DraftKings collected $41 million at the time from several holding companies, and now is in discussion with the Disney Corporation on a billion-dollar deal that could bring ESPN and ABC into the fold.
Billion Dollar Business
Much was made about the possibility that DraftKings and FanDuel might enter the Unicorn Club as billion-dollar companies. But if PokerStars enters the market, it represents a $5 billion financial empire with the deep pockets to outspend both in an escalating promotional war on television and the Internet.
Baazov was sparse with details on Amaya Gaming’s plans in the market. He only said, “We have also taken the strategic decision to enter the daily fantasy sports category and are pursuing parallel tracks of internal development and strategic acquisition. We expect to provide more details on this strategy in the second half of 2015 but see a clear crossover from poker and daily fantasy sports.”
Crossover from Poker to DFS
PokerStars would have many advantages. With the largest poker playing community in the world, it could provide advertising and incentives to those gamblers to register accounts at the PokerStars-brand daily fantasy sports site. While most of those gamblers are European and Asian players who might not be as interested in fantasy football, they might be interested in fantasy basketball, hockey, and baseball, since those sports are more international. And it would be an easy thing to build software for daily fantasy soccer on the English Premier League, La Liga, Bundesliga, and Serie A matches.
David Baazov hinted there might be new acquisitions. It’s uncertain whether that meant any kind of deals involving FanDuel or DraftKings, though Amaya is strapped with massive debt from the PokerStars purchase. Even if Amaya Gaming buys or partners with a lesser competitors, major companies like Sports Illustrated and USA Today already compete the market. Either one of those operations might allow PokerStars to partner with a major American media company.
DFS and the UIGEA
Legal questions still have to be decided. Though it is legal for Americans to gamble on fantasy sports, some questions might remain on whether PokerStars would be allowed to acquire licenses in certain US states which are already barring the company from signing up gamblers, due to “bad actor” status. The fallout from Black Friday still lingers in the United States for the poker company.
The DFS industry is likely to take David Baazov’s news as quite bad. Not only might they face a formibible new competitor in an already highly-competitive market, but they might be concerned about PokerStars poisoning the well.
Problems for Daily Fantasy Sports?
The UIGEA had a carve-out for fantasy sports, because American lawmakers assumed such gambling only took place on a yearly basis–hardly enough to cause problem gambling. DraftKings and FanDuel found the loophole and exploited it. While politicians are not likely to offend the 40 million Americans who gamble on fantasy football every year, they might write laws to ban daily fantasy games.
Having PokerStars in the industry might draw mainstream attention to the similarities between traditional sports betting and one-day fantasy sports. If so, Amaya Gaming’s recent move could endanger an industry which is (5 years in) suddenly very big business.
