Stars Group Revenue Rises 13.6% to $1.3Bn in 2017

The Stars Group, whose gaming brands include PokerStars, PokerStars Casino, and BetStars, released the company’s Q4 of 2017 earnings this week revealing a 16% increase in revenues compared to the same quarter the previous year. Overall, Q4 revenues amounted to $360.2 million, up from the $310.2m collected during the same period in 2016, while net earnings also rose by a more modest 4.7% to $47.1 million.
With Q4’s results completing the firms financial picture for 2017, it can now be revealed that The Stars Group generated $1.3 billion in revenues last year, marking a  13.6% improvement versus 2016. This resulted in an impressive $259.2 million in net earnings for the operator, up by a massive 91.30% compared to 2016’s figure, and commenting upon the latest results, Rafi Ashkenazi, Stars Group CEO, said:
“During the year, we strengthened our core senior management team, delivered another year of record revenues, significantly deleveraged and continued to strengthen our balance sheet, all while investing in marketing, growth initiatives and technology infrastructure to support the long-term growth of our business.”
Online Poker Up 3.7% in 2017
The Stars Group’s online poker offering ended the year with its revenue rising by 7.9% to $234.4m compared to Q4 of 2016, with online poker revenues for the whole of 2017 up by 3.7% to $877.3m year-over-year. Nevertheless, most of the gains were accounted for by preferential changes in foreign exchange rates, without which online poker revenue would have been higher by a mere 1.9% for the quarter, and by 0.9% for the year.
Contributing Factors
Another major factor contributing to the growth in its poker vertical in 2017 was the company’s new focus on building a better ecology for recreational players, and the positive impact produced by its new Stars Rewards scheme. A slight downside, however, was the exit of PokerStars from the Australian market, which previously accounted for around 3% of its revenues. On the plus side, the recent pooling of players across the European markets of France and Spain was touted as having been extremely positive for the online poker room, with the impact expected to be even more positive after Italy and Portugal join the same shared liquidity network.
During its recent conference call, the Stars Group said that its French and Spanish player pools had resulted in a 30% improvement for the company, although it was not made clear whether this figure applied to the number of players or overall revenues.
Stateside, the liquidity sharing agreement between New Jersey, Delaware and Nevada is unlikely to have a major impact on the revenues of PokerStars when it is enacted, if the previous one signed between the latter two states is anything to go by. If Pennsylvania subsequently joins the network, though, then the Stars Group is more likely to see the kinds of growth currently being experienced in its European market.
Casino & Sports Betting Up 45%

The Stars Group reports its casino and sports betting businesses as a combined vertical, with the two generating
revenues of $112.5m for the quarter, up by 40.3% from a year ago. For the whole of 2017, online casino and sportsbook revenues were subsequently higher by 45.4% year-on-year at $384m, with Rafi Ashkenazi telling investors that PokerStars Casino is now ranked amongst the top five internet casinos in the world in terms of revenues. The company’s sportsbook is also expected to made further gains once its recently purchased Australian businesses are included.
“We maintained our global dominance in online poker, with the business experiencing year-over-year growth in that vertical, our online casino has already become one of the largest in the world since its launch in 2014, and our emerging online sportsbook not only recorded meaningful growth in turnover and revenues, but started to become a secondary customer acquisition channel,” stated Rafi Ashkenazi during his investor presentation.
$870M Kentucky Law Case

One outstanding issue that is likely to cloud the Stars Group’s finances going forward, however, is a potential $870 million bill brought against it by Kentucky for flaunting the state’s anti-online gambling laws between 2006 and 2011. While the case is expected to be settled this summer or early fall by the latest, Marlon Goldstein, the Stars Group’s Executive VP, Chief Legal Officer and Secretary, said that his company would be “practical” in the matter, implying that it would be prepared to settle out of court if an acceptable offer was made.
Looking Ahead
Looking ahead, the Stars Group said that it was anticipating revenues of between $1,390 million and $1,470 million for this year, resulting in adjusted net earnings of between $487 million and $512 million for the whole of 2018. This would be equivalent to an overall revenue growth of between 6% and 12% for the company, and commenting upon the rosy picture, Ashkenazi said:
“In 2018, we are continuing to execute on our growth initiatives, including through geographic expansion, inorganic growth, and improving our focus on and understanding of our customers, and we are beginning to realize our goal of becoming the world’s favorite iGaming destination.”