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The French regulator ARJEL awarded a sports betting license to Amaya’s European subsidiary, REEL Malta Ltd. The company will now be working hard to get its BetStars site up and running in France to benefit from the Euro 2016 football tournament.
During the conference call on Amaya’s Q1 2016 results, interim CEO Rafi Askenazi told investors:
“We are currently working with ARJEL and we are really hoping that this process with the regulator in France will be finalized before the Euro [Euro 2016 soccer tournament]. The plan that we have is yes, we do want to have it before, but it’s really not up to us. It’s a process which is going on with the regulator in France.”
Less than three weeks later, ARJEL has done its bit and delivered the requisite license covering both pari-mutuel sports betting and fixed odds betting.
Amaya must now satisfy two further conditions regarding the certification of its equipment and regulatory compliance procedures to confirm the license.
The license runs for five years, and is both extendable and transferable — reassuring for investors who think that Amaya may shortly have new owners.
The Euro 2016 has just started so it will be a difficult management task to get BetStars.fr up and running in time to make the most of the soccer tournament that ends on July 10.
During the conference call, Askenazi indicated that an Italian launch was imminent, and indeed the following weekend BetStars.it launched, well in time to benefit from the intense Italian betting interest in Euro 2016.
Fifty-eight percent of all French sports betting is on soccer matches, so missing Euro 2016 would be a blow to Amaya’s hopes of a useful revenue uplift at the end of the second quarter.
One of the factors depressing Amaya’s share price has been the delay in launching the sports betting product in the major markets of France and Italy.
The French license will prove to be a “license to print money,” the only question is how much?
During the first quarter of the year, the French sports betting market, which does not include horse racing, generated €516 million in wagers, and operator revenues of €82 million. The figures were a lot higher than in the same period a year earlier, with wagers up by 47 percent and revenues up by 30 percent.
If the 30-percent growth is sustained throughout 2016, that would imply total revenues for the sector of €351 million.
Amaya’s PokerStars brand is second in the French online poker market to Winamax. Winamax launched its sports betting business back in June 2014, so there is already strong competition in the market from the closest competing brand.
Nevertheless, a 5 percent market share is not unlikely for the first six months of operation, and that would provide around an extra €17.5 million in revenues for the 2016 accounts.
The new license is good news for Amaya investors; the next few quarters will determine just how good.