Poker is dead, long live poker

For the battered and unloved poker vertical it was the same old story in H1. Revenue declines, tough market conditions and a rueful glance at soaring casino and sports betting revenues left it once again the ugly sister of the egaming family. And yet, for once, there were some faint signs of hope emerging.

You had to look quite hard though. At 888 poker revenues declined 8% in the period after FX adjustments to $43.1m, and their importance to the business also dropped from 23.8% of B2C revenues to 18.4%. In contrast, casino revenues rose 34% and sports betting was up 71% in the period. Even bingo managed a 9% rise.

So it was something of a surprise to see poker at the centre of its analyst presentation with CEO Itai Frieberger stating poker had been reinvented for a mobile generation. Granted the reinvention was mostly taking the now ubiquitous jackpot spin and go (SNG) model that Winamax invented and PokerStars co-opted as their own, but it was a statement of intent.

Poker was being redeveloped for the mobile platform and 888’s next update of its poker software would be designed for the seamless multi-platform world and represent the new standard for all its verticals’ offerings. This is led by a clear shift in the sector towards tournament play and in particular the shorter session times afforded by jackpot SNGs.

On the turn

This move away from the ostensibly more profitable cash games towards tournaments has been led by PokerStars, which said tournaments were its largest revenue contributor in H1. Poker revenues were down 9% in the first half of the year at Amaya, but stable in the second quarter as changes to its player rewards, an increase in rake and a focus on more recreationally focused games began to pay off.

And this is the wider trend we are seeing throughout the sector. Poker has been forced by the broader market conditions from a game aimed at selling the dream of becoming a poker pro through skill and hard work to a fast, fun gambling game that suits a mobile gaming generation. It’s a pretty seismic shift.

Amaya CEO Rafi Ashkenazi said at its H1 results the firm’s focus on recreational players “continues to see signs of success resulting in additional poker revenue”. Adding this was in part due to increased revenue from higher rake being reinvested back into recreationally focused CRM campaigns. And he added there was “virtually no negative revenue impact from high volume players” as a result of the changes.

“As a result, the bankrolls of new and recreational players are lasting longer, which we believe will lead to increased retention, greater engagement with our site across all verticals, and more frequent deposits, improving our lifetime value from these customers,” he added. And contained within that sentence is perhaps the most important message for what poker might mean to operators in the coming years. The role of poker is changing fast.

A health check

On the face of it poker is not in a healthy state. Poker revenues declined in H1 throughout Europe, with a 9% drop in Spain and a 6% drop in Italy alongside single digit declines in most other markets, according to the latest research from Eilers & Krejcik Gaming. And this comes against a backdrop of strong growth in casino and sports betting, making the gap between poker and the core two verticals larger with each passing month.

But poker is not dead. And there are a number of operators pushing hard to turn it back to growth. The new version of Unibet’s innovative poker room will be watched closely by all in the industry as we look to see how to take the game forward as a product for the mobile gaming market. And PokerStars efforts in terms of trialling new game types and experimenting with player ecology shouldn’t be understated here either.

They, along with Unibet and 888, are trying to reinvent the game rather than simply managing decline. And it’s having a knock-on effect throughout the industry with one of the most interesting impacts being altering how the game is perceived within multi-vertical operators. As poker moves more towards similar player motivations and actions like other gambling games, so the cross-sell becomes more natural.

Certainly at Amaya the focus has been on maximising the cross-sell in H1 and 888 said it would increase focus on “cross-selling to other products” as part of its poker revamp. This is a similar move to what we’re seeing with bingo, where the vertical is as much an acquisition channel into casino as a product in its own right. Ironically the decrease in focus on the pure poker revenues also increases its importance within the egaming sector.

Firing at the flop

Poker is no longer viewed as a stand-alone vertical, or as sportsbook operators have seen it a must-have, but would rather not have, product to retain players. It’s now increasingly viewed as a low-cost acquisition channel to cross-sell players into casino and sportsbook products.

For a long time poker has been viewed with a mix of distrust and disinterest by the wider egaming interest but that could finally be starting to change. Poker is trying to reinvent itself as a game for the masses, but the real trick could be reinventing its role in the wider egaming ecosystem.