3. The Stars Group (2018)
Financials: Group revenues including SBG and BetEasy were $572m in Q3, an increase of 74%, while revenues from the core PokerStars business climbed 7%
Strategy & impact: The firm had been gradually reducing its reliance on poker and sped up the process dramatically with its dual acquisitions earlier this year
Geographic reach: Stars takes pride in its uniquely large collection of regulated gaming licences and ability to enter new markets
Influence & leadership: CEO Rafi Ashkenazi is well respected and collected a formidable line-up of execs through M&A, including the SBG team
In just about every conference call since taking over the top job at The Stars Group (TSG), CEO Rafi Ashkenazi has spoken about his ambition to turn the company into the world’s favourite online gaming destination, and judging by this year’s rankings, TSG isn’t far away from achieving that goal. It was a truly transformational year for the company, as it wrapped up more than $5bn in acquisitions, including the $4.7bn deal for Sky Betting & Gaming (SBG). In Q3, group revenues including SBG and BetEasy (formerly CrownBet) were $572m, an increase of 74%.
But the deal-making itself was arguably the easy part, and now the real work begins as TSG starts its transformation from a poker company into a multi-vertical powerhouse.
The rise of GVC and its deal-happy approach may have created the illusion that integrations are a cinch, but it wasn’t so long ago that bwin.party and Paddy Power Betfair were hamstrung by major projects.
Indeed, there seems to be some concern that TSG ‘bought high’ on SBG, with the Leeds-based firm reporting a 31% decline in profits for the third quarter of 2018 and a 5% decline in sportsbook revenues. Adverse football results were blamed for the downturn, but even the 16% rise in gaming revenues is a long way from the 37% growth seen across the business in FY17. “Stars has learnt the hard way that sports betting is materially more volatile than gaming,” said Regulus Partners analyst Paul Leyland.
The focus on betting, however, obscures the inexorable rise of the PokerStars Casino machine, which grew 29% year-on-year to $108m in Q3. Poker also continues to show signs of growth thanks to the ground-breaking rewards programme and shared liquidity in key European markets. Looking forward to 2019, TSG, like many others, is pinning its colours to the US sports betting mast. The firm says it will leverage SBG’s unique experience of media partnerships to gain a foothold in the US.
If this time next year TSG has added ESPNBet to its portfolio of brands, Rafi Ashkenazi may come close to achieving his wish.