A Response to Inaccuracies Regarding our Business

< Previous ArticleNext Article >

Following the conclusion of discussions with William Hill regarding a potential all-share merger of equals, the company wishes to take this opportunity to clarify certain inaccuracies contained in an open letter from a William Hill shareholder to William Hill's board of directors.


We acknowledge that our significant market share in the global online poker market (estimated at 71% of player traffic as of Q2 2016) and revenues that are approximately 10 times larger than our closest competitor may make the overall poker market less attractive to our competitors. However, Amaya believes online poker remains very attractive for its business as we maintain significant competitive advantages through the network effect of approximately 2.4 million quarterly active unique players on our platform (as of September 30, 2016). 

It is simply not true to say that poker is a mature or declining market based upon certain public data which under-reports the size and growth of the poker market. For instance, PokerScout data, which tracks average ring game players not tournament play, is widely used for measuring poker player traffic, but increasingly only shows a small piece of the pie as it does not capture the continuing customer trend towards tournaments. Tournaments, comprising multi-table tournaments, sit-and-go's and spin-and-go's, contributes the majority of Amaya's online poker revenue, which has been growing on a constant currency basis in the full year 2015 and in the second quarter of 2016.

Measurement of unique poker player traffic for PokerStars has been consistently growing year-over-year for each quarterly period in 2016. Key poker metrics on the PokerStars platform show healthy trends in constant currency terms, even before factoring in our success in marketing casino and sportsbook to those same players.

From a regulatory perspective, Amaya also currently anticipates potential future growth in the global market from positive legislation in the U.S. and elsewhere.


There is no factual basis for stating that it is inherently difficult to cross-sell poker players other online gaming products as it relates to Amaya. In fact, Amaya has seen success in cross-selling its online casino and sports betting products while increasing the lifetime values of cross-sold customers. Through cross-sell alone, Amaya estimates that its online casino currently has one of the largest casino player bases among its competitors. We have never said and do not believe that there was a backlash against any cross-sell push.

More specifically, an independently-conducted survey of Amaya players shows approximately 35% of poker players play online casino products with Amaya or our competitors and approximately 40% of poker players play online sports with Amaya or our competitors.  

Amaya's 2016 quarterly financial results show that the majority of Amaya's casino revenue is largely incremental and that we are increasing the share of our customers' wallet and keeping customer play within our products.  

Moreover, Amaya's strength in poker has enabled us to become one of the largest casino sites in the world in terms of active customers in less than two years with no external marketing. 

Loyalty and VIP Changes

The changes made to the PokerStars loyalty and VIP program have thus far had a net positive impact on our business and the overall poker environment. The changes have actively dis-incentivized some forms of high-volume play that does not positively contribute to the poker environment and does not contribute to our earnings.

Player liability of net depositing customers has been stable throughout 2016.  

Cash Conversion, Capital Expenditure and One-Time Costs

Claims that our cash conversion of EBITDA is around 39% is factually incorrect as it included the change in player balances. We believe calculations of free cash flow should exclude the impact of changes in player balances given that these are funds held in segregated accounts on behalf of players. Actual Unlevered Free Cash Flow cash conversion from Adjusted EBITA for the period in question was approximately 69% per Amaya's second quarter conference call webcast presentation. 

Amaya's capital expenditure was 2.08 times depreciation in H1 2016. This is primarily because we are continuing to develop and build our casino product offering and our sportsbook product offering remains in investment mode. Additionally, this includes investments in our operations in New Jersey to support our regulated business in that state. 

Since the Rational Group Acquisition in August 2014, Amaya has undergone transformational change with various one-time costs, including, but not exhaustively, those relating to the sale of two businesses in 2015, acquisition of Rational Group, migration of Full Tilt to the PokerStars platform, closing of two offices and certain associated restructuring costs, and legal and advisory expenses around the AMF investigation and strategic alternatives processes. Amaya's annual financial statements are audited, and its quarterly financial statements reviewed, by Deloitte LLP's London office.

Amaya's public filings, releases and other disclosure can be found at the Amaya corporate website here, including on its investor webpage here and on its corporate news page here, as well as on SEDAR at www.sedar.com and Edgar at www.sec.gov. 

PokerStars ps_spade_corp1-16-thumb-450x450.jpg

Eric Hollreiser is Vice President of Corporate Communications for Amaya Inc. and PokerStars.

Click here for French translation.

Cautionary Note Regarding Forward-Looking Statements
This post contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable securities laws, including, without limitation, as it relates to Amaya's future performance, growth and trends, including as it relates to online poker, and the performance, growth and trends of the overall online poker market, as well as the cross-sell among Amaya's product offerings. Forward-looking statements can, but may not always, be identified by the use of words such as "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "would", "should", "believe", "objective", "ongoing" and similar references to future periods or the negatives of these words and expressions. These statements, other than statements of historical fact, are based on management's current expectations, assumptions and estimates, which it believes are reasonable, but which are subject to a number of risks and uncertainties that could cause actual results and outcomes to differ materially, including risks associated with the entry into and consummation of a potential merger, ability to realize expected synergies and successfully integrate the companies in the event of a merger or other transaction, market and economic conditions, business prospects or opportunities, future plans and projections, technological and business developments, and regulatory trends and changes. Other applicable risks and uncertainties include those identified under the heading "Risk Factors and Uncertainties" in Amaya's Annual Information Form for the year ended December 31, 2015 and "Risk Factors and Uncertainties" and "Limitations of Key Metrics and Other Data" in its Management's Discussion and Analysis for the three and six months ended June 30, 2016, each available on SEDAR at www.sedar.com, EDGAR at www.sec.gov and Amaya's website at www.amaya.com, and in other filings that Amaya has made and may make with applicable securities authorities in the future. Investors are cautioned not to put undue reliance on forward-looking statements. Any forward-looking statement speaks only as of the date hereof, and Amaya undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Back to the Corporate Blog