What Kind Of DFS Player Is Amaya Going To Be?

Amaya Will Leverage StarsDraft To Help The PokerStars Brand, No Matter How Small That Presence Is

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Thanks to its recent acquisition of daily fantasy sports site Victiv (recently rebranded as StarsDraft), PokerStars has once again established a presence on US soil.

Parent company Amaya Gaming will be adopting a conservative approach to its latest vertical, one that relies more on brand recognition and leveraging its extensive database than it does spending otherworldly sums on marketing campaigns, ala FanDuel and DraftKings.

While this strategy will provide Amaya with a smoother path to profitability, it also caps the foothold the company will gain in the US in 2015.

Guaranteed prize pools tell the tale

During a recent earnings call, Amaya CEO David Baazov stated that DFS is not a “category in which we will be doing any significant investment in.”

A quick glance at the current StarsDraft contest lobby offers clear and compelling evidence that Baazov’s statement was not just huff and puff, as the biggest NFL guarantee currently present on the site is only $100,000. The next four biggest guarantees will award a combined $85,000.

Compared to Fanduel, whose front page adorns over $8 million in NFL Week 1 guarantees, StarsDraft is hardly a blip on the radar.

DraftKings isn’t exactly resting on its laurels either, offering a $100,000 first place prize to the winner of its $1 million kickoff and hosting a season long $10 million guaranteed Millionaire Maker tournament.

StarsDraft’s Week 1 guarantees are much more in line with other second tier operators, and really, toward the bottom of the barrel relative to even them:

  • Relative newcomer Yahoo Daily Fantasy will go live with a $1 million guaranteed NFL Kickoff and host two other six-figure guaranteed tournaments.
  • Fantasy Draft comes in second among the industry’s lesser-known sites, going big with a $250,000 guaranteed tournament and awarding an additional $200,000 spread across its next four biggest guarantees.
  • Fantasy Feud will be hosting just over $200,000 worth of Week 1 guarantees, including qualifiers to its $1 million NFL Feud of Champions, to be held toward the end of the season.
  • Fantasy Aces will end the season with a $500,000 guaranteed live final, comprised of qualifier winners. It’s largest direct entry tournament during Week 1 will award $50,000.

StarsDraft’s contest lobby provides no immediate clue that the site was acquired by the online poker industry’s perennial market share leader, instead barely serving the old Victiv brand (which currently possesses a higher Alexa ranking than Fantasy Draft, Fantasy Feud and Fantasy Aces) justice.

How vital a role will PokerStars’ existing US database play?

PokerStars prides itself on the size of its player database, and rightfully so.

According to a report published by Eilers Research entitled Initiating coverage on Amaya, Inc., the Rational brands have registered over 93 million users, over 5 million of whom are active.

However, the last time Rational added a US-based real-money player to its database was presumably in April 2011, meaning that the last players who (legally) registered an account on PokerStars are at least 25 years old.

Considering that the majority of DFS players are millennials (61 percent by Eilers’ estimates), a substantial segment of the demographic StarsDraft will want to target simply won’t be on the mailing list.

Going further, PokerStars’ strategy in Europe is to cross-sell its existing poker players on Amaya’s other verticals. To this end, the company has been wildly successful. In Q2 2015, the group’s online casinos accounted for 11 percent of total revenue, representing a 78 percent quarter-on-quarter gain.

During that time span, 320,000 active users played casino games – a significant cross-sell.

The problem is, cross-sell opportunities don’t yet exist in the US.

They will someday, as PokerStars will likely establish its poker brand in New Jersey, California, New York and Pennsylvania. But at the current snail’s pace of online gaming regulation in the US, that could take several years, and will still only account for roughly a quarter of the population.

On the bright side, PokerStars can leverage its existing US database to effectively and inexpensively market to what is arguably the second biggest DFS demographic, 25-34 year-old males.

But make no mistake, with regards to US-based daily fantasy sports, PokerStars’ database is less valuable than say Yahoo’s, which has hosted traditional fantasy leagues in the US for years.

Similarities between poker and daily fantasy sports will aid StarsDraft

natural synergy exists between poker and daily fantasy sports, as they’re both skill games (to varying degrees) possessing strong elements of luck.

Already, poker players have gravitated toward DFS in droves, some of whom have made the transition to professional players. Existing DFS operators have capitalized upon this by partnering with established poker brands.

As the most trusted and recognizable name in online poker, PokerStars will naturally attract US poker players, many of whom are chomping at the bit to participate in any game offered by PokerStars, poker or otherwise.

What else does StarsDraft bring to the table?

Although it’ll be competing against established entities in the daily fantasy sports arena, StarsDraft will own several critical advantages over the average startup:

  • StarsDraft will likely abide by the same rigid security and identification verification protocols that PokerStars does in countries where online poker is strictly regulated.
  • PokerStars is a pioneer in the mobile arena, attracting over 60 percent of new player signups via mobile channels.
  • With regards to Search Engine Optimization experience, PokerStars expertise is unmatched.
  • PokerStars’ ability to forge partnerships with sports celebrities and established pros has resulted in marked liquidity gains. Its current Dream Team Collection promotion and subsequent Facebook marketing campaign are perfect examples.

However, all of this is still not enough to counter the less-than-envious position StarsDraft will find itself in by not launching a viral marketing campaign.

That being said, it should help enough to propel the operator to something resembling a 2-4 percent share of the market and weekly guarantees that approach the quarter-million mark by the time the final snap is taken this February.

Amaya playing the long game

Amaya clearly has little intention of taking the daily fantasy sports industry by storm, instead opting for an approach that allows it to swiftly establish a gaming presence in the United States without risking large quantities of money.

The way I see it, this is a win-win for Amaya.

If the daily fantasy sports industry falls prey to either heavy regulation, or even worse, is deemed illegal gambling, then Amaya will still have managed to raise its brand recognition in the US and fill its database with players that can be the target of future marketing campaigns – all at a relatively cheap price point.

This will prove critical as Amaya slowly establishes its casino and poker brands in the US.

On the other side of the spectrum, should daily fantasy sports become the next big thing, Amaya can utilize its expertise and piles of money to turn players on to its brand.

Eventually, Amaya will gain the ability to cross-sell poker and casino games to its US-based daily fantasy sports fans. How ironic.

In either case, Amaya can leverage its US operation into a global operation that potentially reaches billions of sports fans.

- Robert DellaFave is a game designer and avid poker player. He writes for several publications centered on legal US online poker and the regulated online gambling industries in New Jersey and Pennsylvania.
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