PokerStars has been in the business news lately as parent company Amaya admitted to talks with William Hill about a potential merger. With both companies issuing statements confirming the talks, it seemed serious. However, after a primary William Hill investor expressed public disapproval of the merger, talks stopped. The merger is now off the table.
Said deal between William Hill and Amaya would not have adversely affected the online poker community much, as Hill’s online poker site is a rather small one that is currently part of the iPoker network. Any absorption of Hill’s online poker into PokerStars would not have eliminated a major competitor of PokerStars or removed a major option for most of the world’s players.
GVC was mentioned in the original news about Amaya considering its options, though, and should those talks resume, PokerStars and PartyPoker/bwin would be owned by the same company. That would be detrimental to the poker community.
When William Hill abandoned merger discussions with Amaya, analysts surmised a variety of reasons, including the dismay of Hill’s primary investor Parvus Asset Management, the lack of a permanent CEO in place at Hill, and the state of its online business strategies.
Amaya then issued a terse response via an open letter to William Hill’s board of directors to clear up inaccuracies as described by Parvus in its public objections to the deal. The statement detailed the consistent growth of PokerStars and anticipation of future growth, the company’s ability to cross-sell products into online casino and sports betting services, the positive results of recent VIP changes at PokerStars, and the one-time costs affiliated with the Rational Group acquisition that should not be concerning to potential business interests.
The message from Amaya’s Vice President of Corporate Communications, Eric Hollreiser, came with a distinct feeling of wanting to clear the air in case other companies remained interested in potential merger talks. And the original Bloomberg article that explained Amaya’s interest in remaining a happy company in its current state was updated to remove that section.
The dismantling of talks with William Hill could open the doors for GVC to pursue more serious discussions with Amaya. And with a clearer vision of the expectations of Amaya on the table, other companies could walk through the door with ideas for a deal.
Should it be GVC, the merging of PokerStars and PartyPoker/bwin would be quite serious for online poker players. As the industry stands now, many players around the world have fewer options than at any other time in the past decade for online poker action. The top three sites open to most markets and offering the most liquidity are PokerStars, 888poker, and PartyPoker. Those three sites compete for the majority of the world’s online poker players, and they remain highly competitive with each other.
Players currently benefit from competitive sign-up and reload bonuses, tournament guarantees and series, cash game options, and loyalty programs. Even in a small market like New Jersey, those three sites are the only competitors and consistently try to one-up each other with offerings for players.
The merging of sites like PokerStars and PartyPoker would create more liquidity but remove one of the most lucrative alternatives to PokerStars. The combination of those two companies would leave 888poker as the only major competitor, the only other option for high-stakes, mid-stakes, and most professional players in most areas of the world. There would be fewer incentives for the sites to offer ambitious guarantees, bigger series, and more VIP benefits.
In addition, a PokerStars/PartyPoker combined online poker site would simply monopolize the industry, leaving 888poker in the distance and any other sites in the dust. Companies like Unibet, MPN, and iPoker would find it necessary to merge just to stay competitive and even stand in the vicinity of the giant’s shadow. It would be a monopoly in an industry that so desperately needs competition in order to continue any type of significant growth.
Companies are always going to look to improve profits and grow. It makes good business sense. But the extreme emphasis on mergers and acquisitions in 2016 and going forward offers a somewhat bleak outlook for the online poker community. Players have already been hit by VIP changes and the move that most sites are making toward a recreational model, and any further strikes could produce serious damage to many players who currently serve as balance to the recreational crowd.
With some luck, Amaya will be extremely judicious about any potential deals that would affect its still-strong and battered-but-not-broken poker base.