I have a new hero – at least in Business terms. After leading the Amaya takeover of PokerStars last year, David Baasov has been crowned the ‘King of Online Gambling’ by Forbes. The article is linked below, along with some fascinating numbers about online gambling which came from the story. Baasov’s persistence and grit really shines through in the article. He is up there with Elon Musk and (the younger) Richard Branson for me…
Cliff Notes on the Takeover
Here is the Forbes article, it is quite long, though I recommend you read it.
The summary would be something like this. Successful business guy with $150 million in revenues persuades banks and private equity firms to lend him $4.9 billion to buy the biggest online poker sites (PokerStars / Full Tilt), even though they were not for sale.
Not only did David Baasov pull off the deal, he made himself a ton of money in the process. His equity in Amaya is estimated to be worth $800 million… which of course pales into insignificance compared to the billions the owners of Rational Group walked away with.
Interesting Figures from the Article
There are a lot of numbers in the article which caught my eye. Here are some of the most interesting, along with my thoughts.
PokerStars has 89 million players, 5 million of whom are active in any one month.
This is an amazing figure, 89 million is more than the population of many major countries. Of course, many are bored with poker (most people’s enthusiasm tails off fairly quickly). Strategies to bring these players back, or to offer them something different (sports betting / casino games anyone?) could result in a huge boost to profits.
Thinking of profits…
PokerStars were making $417 million a year!
This was on a turnover of $1.3 Billion, an incredible profit margin just from poker. If there ever was a definition of a ‘cash cow’, then I think this is it. This makes the final purchase price around 12 years worth of profit.
60% of Revenues from Pre-2010 Players
This one caught me by surprise. Players who joined between 2001 and 2010 generate 60% of the revenue. I’m thinking these must be the more established grinders. It might also account for the richer economies in the world taking up poker first. The later joiners like the eastern Europeans are more likely to be ‘bonus whores’ and micro-stakes grinders (able to multi-table $2 games as the cost of living is so low in their countries…).
Poker Makes up 10% of Online Gambling
It is easy to imagine that poker is the epicenter of the online gambling world. Wrong! I already knew this one, though not the exact number. 10% is about right, casino games (slots especially) and sports betting are both huge in comparison…
30% of FTP Players have Tried the Casino
Many poker players are anti house-edge (casino) games. It amuses me that even players who lose a ton of money at the poker tables think like this (though for winners / serious players, fair enough). 30% feels a little low, though this is a huge overall number of people. I wonder whether PokerStars expects to see the same percentage… that would be more than a million casino players every month, incredible to think of.
My view is that the FTP casino has a long way to go, especially the slots. When they get some of the better titles in place (PlayTech, NetEnt for example), even more people will be attracted.
Sport Betting is a skill game of course (like poker, 90% lose at it, but that is not the point…), when these sites unleash betting, their profits could skyrocket.
Well, respect to David Baasov – your story blew my mind!
GL at the tables, Mark
Submitted by Planet Mark on Sat, 01/10/2015 - 14:53