PokerStars Portugal’s Surprisingly High Cash Game Traffic Is Not That Surprising After All

Recent visitors to PokerScout.com were probably caught off guard to see PokerStars.pt (PokerStars‘ Portugese website) in second place above 888‘s global site in the cash game traffic rankings.

But a close examination reveals that the numbers are in line with what one might expect.

An expected anomaly

Based on PokerScout’s data, it would appear that PokerStars is faring significantly better in Portugal than in the more heavily populated European countries of France, Italy, or Spain:

• PokerStars Portugal = 2,000 average cash game players
• PokerStars Italy = 900 average cash game players
• PokerStars Spain = 800 average cash game players
• PokerStars France = 650 average cash game players

As surprising as this might seem, considering Portugal has a total population of just over 10 million compared to France’s 66 million residents, it’s actually not unexpected when taking into account several factors contributing to PokerStars.pt’s place of prominence:

1. PokerStars is the only licensed site in Portugal at the moment
2. It’s a nascent market, which often causes an initial surge of players
3. Spin & Go’s are not yet available in Portugal
4. The site launched with a slew of promotional offers, including the popular CardHunt event, a mystery deposit bonus, and daily freerolls.

First off, Portugal is not a larger poker market than the other countries listed. Second, even without competitors, PokerStars Portugal isn’t outperforming PokerStars France, Spain, or Italy.

Furthermore, the numbers themselves are a bit misleading and a clear demonstration of how cash game traffic is becoming an increasingly limited metric for judging the size and health of poker markets.

The three causes of cash game decline

A combination of three variables is feeding the notion that online poker (and PokerStars in particular) is in a free fall, with cash game traffic undergoing a significant decline in the past few years.

• The addition of lottery sit & go’s and other untracked games
• Legalized markets segregating their player pools
• More markets turning black and/or increasing enforcement policies

Taken altogether, global cash game traffic is down by about 35,000-40,000 average players since the spring of 2011.

A significant percentage of this can be attributed to the loss of the US market on April 15, 2011, when global cash game traffic numbers dropped by 25,000 players virtually overnight.

During the same period of time, PokerStars’ global site is down from 30,000 average cash game players in the spring of 2011 to just 14,000 in presently. But PokerStars was less impacted by Black Friday than the global market as a whole.

As late as early 2014, PokerStars was still hitting 25,000 or so cash game players, according to Poker Industry Pro via PokerScout data.

Market segregation

There has been a lot of market segregation since Black Friday, which is a three-pronged problem for operators.

• It tends to tamp down traffic, as liquidity begets liquidity.
• Second, it also increases cost on operators (licensing fees and taxation), which are often passed on to players.
• It balkanizes a company’s player base, making it appear to have fewer players than it really does. If we add the players from France, Italy, Spain, and several other segregated markets in which PokerStars operates, the company’s average cash game traffic (across all sites) is closer to 20,000 average cash game players.

Gray markets

PokerStars has also left a number of small to mid-sized gray markets in recent years (here, here, and here) which has further cut into its player pool.

Untracked games

And then there are Spin & Go’s.

A lot of analysts, as well as the poker community writ large, are still relying heavily on the easily obtainable cash game traffic (and to a lesser extent registration numbers for major tournaments) to judge online poker sites.

They haven’t adjusted to the increasing availability and popularity of untracked games, like Spin & Go’s. And they aren’t taking into account the changing attitudes and behaviors of casual poker players, many of whom have been eschewing traditional cash game tables for Spin & Go’s and other formats.

Going back to the PokerStars.pt and PokerStars.fr/.it/.es comparison, yes, the number of cash game players at PokerStars.pt is more than double .es and .it, and nearly triple the number at PokerStars.fr.

But when factoring in tournament traffic, Sit & Go traffic, and Spin & Go traffic, all three have more players than PokerStars.pt.

Upshot #1

Online poker doesn’t appear to be in a structural decline if we look at all games offered and not simply cash game data. As the Portugal market demonstrates, cash game traffic can be misleading.

How healthy is online poker?

There is also a fear within the poker community that online gambling companies are trying to dissuade people from playing poker and entice them into their online casinos and sports books, or at the least participate in unbeatable poker formats.

But consider for a moment that PokerStars has added $500 million in revenue from casino and sports, almost exclusively from cross-selling those two verticals to its poker players. (PokerStars only recently began acquisition marketing for casino.)

Despite marketing casino and sports to its poker customers, PokerStars’ publicly available numbers from its earnings reports shows poker to be at least relatively stable, down just a tick over the past year.

Basically, there doesn’t seem to be much cannibalization of poker since the addition of online casino and sports betting. Where there has been cannibalization is from the cash game tables toward other poker games, but this could be categorized as more of a trend than cannibalization.

The lingering question is whether online poker will awaken from its slumber and become a growing vertical in the months and years to come.

Upshot #2

At first glance, it seems online poker, casino and sports betting can coexist without cannibalizing one another, particularly poker.

It will be interesting to see how players mingle between these three products — and if intermediary products like Spin & Go’s and Beat the Clock tournaments act as a gateway for traffic in both directions — once PokerStars acquisition marketing for casino, sports, and poker are all up and running.