The Stars Group, parent company of PokerStars, reported surges in third quarter net revenues and EBITDA Thursday morning from its upstart online casino and sportsbook segments as it continues to eye fresh opportunities in the U.S.
Last month, Pennsylvania became the first state to legalize internet gambling in nearly a half-decade, opening up an attractive new market that could lead to other states following suit.
“With a population almost twice the size of New Jersey, Pennsylvania is poised to become a significant marketplace for iGaming and a potential boost to our U.S poker business (as) Pennsylvania is expected to share liquidity with New Jersey and other U.S states (as they regulate),” Brian Kyle, chief financial officer of The Stars Group, formerly known as Amaya Gaming, said on a conference call with investors.
“We are optimistic that Pennsylvania will be a catalyst for other U.S states to continue the momentum of iGaming regulation in the U.S.”
Marlon Goldstein, chief legal officer, indicated that the company is exploring a partnership arrangement as well as applying for a license of its own.
“We’re still evaluating our options in terms of who we may want to partner with and the landscape in Pennsylvania generally,” he said. “But… we are really excited to be competing in that market sequentially as soon as [possible].”
The Pennsylvania news comes on top of a strong third quarter earnings report.
Revenues from casino and sportsbook grew 48 percent to $95.2 million year-over-year, while global revenues from poker – the company’s bread and butter segment – posted 12.5 percent growth to $221.4 million.
Enterprise-wide, net revenues grew 22 percent to $329.4 million, topping consensus estimates by 5.5 percent. Adjusted EBITDA surged 26.5 percent to $155.8 million over the prior year quarter, beating consensus by 13 percent. Adjusted net earnings per diluted share grew from $0.42 to $0.58.
“Not only did we see improvement in our poker business, but our casino continues to grow with a significant active player base, and our online sportsbook continues to see meaningful growth in turnover,” said Rafi Ashkenazi, chief executive officer.
“We are now one of the world’s largest online casino and online live dealer casinos among our public competitors based on active players, which is an outstanding achievement for such a young offering,” he continued.
In July, the company launched the Star Rewards loyalty program to incentivize customers for play across its poker, sportsbook and casino verticals and provide a better experience for more recreational players.
Through the end of the quarter, Stars Group estimated that 85 percent of total users had been enrolled in the program and that $45 million in prizes had been distributed. Ashkenazi stressed that that is leading to heightened player frequency, volume and deposits.
“We believe this is a great example of the benefit of investing significantly in our proprietary technology infrastructure over many years,” he said. “This quarter’s results reflect some of the benefit of the rollout, and so far the program is performing in line with our expectations.”
The company grew its quarterly active users by 2 percent to 2.1 million, 2 million of which played poker. Online casino users grew 20 percent 553,000, while sportsbook – which has limited jurisdictional availability – grew uniques by 14 percent to 273,000.
For the first nine months of 2017, Stars Group has grown revenues by 12.7 percent year-over-year to $845 million and adjusted EBITDA by 20.4 percent to $376.5 million.
The Stars Group maintained its previously-issued full year guidance of $1.3 billion in revenue – which would represent approximately 14 percent growth – $600 million in EBITDA, $457 million in net income and earnings per share of $2.24.
The company had $2.45 billion in outstanding debt on its balance sheet as of September 30 against $198 million in cash.
