PokerStars to Lay Off 180 Workers After €400,000 Dutch Fine

The PokerStars online card room has reportedly placed 180 jobs at risk following a €400,000 fine from the Dutch gambling regulator, Kansspelautoriteit, for serving players based in the Netherlands without a license. The Stars Group, which operates the PokerStars network, hasn’t been in the best financial position throughout 2019.

Employees Aware of Job Risk

It has been made clear to all PokerStars employees that some of them will not be able to continue working for the company over the course of the next two years. All in all, 80 members of staff at the Isle of Man headquarters have been given a pre-warning over the future of their respective jobs. The company is responsible for two offices on the Isle of Man, which employ around 450 people.

According to reports from Isle of Man Today, 10 PokerStars employees will no longer have a position with the company by the end of the year. The proceeding 18-24 months will then likely see more layoffs take place. The reductions were announced to staff Thursday, Sept. 19, 2019.

Map of Isle of Man
PokerStars Locations in Red

The latest word is that Stars is also letting go of employees at its Malta location. Reports suggest that 50 TSG staffers have already lost their jobs in Malta with possibly as many as 50 more also getting the axe in the near future.

Cuts Necessary Following Dismal Financial Year

Speaking on the decision to cut jobs, a spokesperson for The Stars Group provided some insight into the route that the company is taking. He said:

…PokerStars has faced many headwinds over the last year, including disruptions in our key markets. As a result, we are pursuing operational initiatives, including cost-optimization initiatives…

The spokesperson went on to remind everyone that The Stars Group has gone through similar operations in the past, stating that this is a necessary course to take in order to reassess the “fixed cost base”.

It is this mindset that has led to the PokerStars layoffs, which the parent company believes will be of great assistance in being able to ensure its growth. Yet, the spokesperson was also quick to point out that even though job cuts will be taking place, this should not affect the overall operations of the headquarters on the Isle of Man.

2019 Has Been a Struggle for The Stars Group

Figures from financial reports made by The Stars Group for the second quarter of 2019 displayed quite the dismal result, with earnings of just 48 cents per share recorded. Comparing that with figures from the same time period in 2018 shows a 20% decrease.

It should be noted that net revenues for the company saw an increase of 55% on the second quarter of 2018. Yet, this is due mostly to the fact that The Stars Group acquired the Sky Betting and Gaming brand, and has no reflection on organic growth. In fact, poker revenue for the company was roughly flat in 2018 as compared to 2017.

Due to the decline in financial earnings, the company went on to revise its guidance for analysts. Now, its yearly revenue estimate has also declined, going from somewhere between $2.64 billion and $2.765 billion to between $2.5 billion and $2.575 billion. Not only that, but earnings per share was also revised at the same time, declining from between $1.87 and $2.11 to between $1.68 and $1.83.

Stock of TSG Has Plummeted Since Its Highs Around the Middle of 2018

Gray Market Abandonments

Referring back to the “disruptions” regarding the company’s “key markets,” the spokesperson described these as being those locations where online gambling is still quite the gray area. Both PokerStars and its parent company have continued to operate in these legally unsound areas, but it’s also clear that many of these countries have taken steps towards controlling online gambling in some way.

The historic pattern displayed by The Stars Group is to continue serving gray markets until some definite steps are taken by the authorities to penalize illicit online gaming activity. Then the firm elects to stop transacting in that jurisdiction, hoping to be able to eventually return when and if interactive gambling licensure is available.

Due to this, the PokerStars brand has had to pull out of some countries, which has seen traffic numbers take quite the steep nosedive at times. This is just what happened in May 2018 when PokerStars closed its doors to customers in Hong Kong and South Africa. This followed the room's decision to cease doing business in Australia in September 2017.

Government Set to Work with Those Being Laid Off

Those who could lose their jobs through the upcoming layoffs will receive assistance from The Isle of Man Department for Enterprise. Reports seem to suggest that PokerStars has discussed the layoffs with the Department although very few comments were made to suggest what sort of help will be given to those about to be made redundant.

A representative for the Department also spoke with Isle of Man Today and said:

Our innovative digital sector and strong economy means tech skills are in high demand and we therefore would hope that those staff ultimately affected will have a number of opportunities elsewhere on the island.

Even though this is the case, online poker still remains as the most recognized sector of The Stars Group. This is despite the fact that it has been struggling now for several years, with traffic falling every year – sometimes by double digits – for roughly the past decade. PokerStars remains as the world’s largest online poker room, but when it comes to cash game traffic, it no longer holds the top spot.

€400K Fine from Kansspelautoriteit Causes Further Grief

Not only has 'Stars had to inform some of its staff that around 180 people will no longer have jobs within two years, but the parent company is also having to deal with a €400K ($438K) fine from the Dutch regulatory body, Kansspelautoriteit (KSA). This came following investigations by the gambling regulator, which found that PokerStars has been serving Dutch customers without a valid gambling license. The decision against The Stars Group was announced on Monday, Sept. 23.

Kansspelautoriteit Oversees the Dutch Gambling Industry

The Netherlands has been working toward the launch of its liberalized online gambling market, which is set to take place in 2021. However, KSA has been serving fines to those platforms that have been illegally operating with the country, and Pokerstars was found to have allowed Dutch customers to gamble on its site in such a way.

In the second half of 2018, a probe was launched by KSA, which discovered that the PokerStars.eu client was readily able to be accessed from a Dutch IP address. Further evidence of such activities came from the fact that PokerStars allowed players to make deposits using the iDEAL payment method, which only services Dutch users.

Over 30,000 PokerStars Accounts Utilized iDEAL

The investigation of KSA also found that around 225,000 transactions took place with the iDEAL payment method, which were linked to about 33,000 PokerStars.eu accounts. Those transactions took place during a six-week period in the summer of 2018. Since the discovery, PokerStars has removed the iDEAL payment processor from its cashier and erased the Dutch-language version of its site and contact form.

It wasn’t just the iDEAL transactions that proved PokerStars was serving Dutch customers though. Links were also displayed on the site that led to two separate Dutch problem gambling organizations.

Yet, The Stars Group denied any sort of breach, saying that the information on its site was made available in accordance with the rules set out by the KSA. It went on to say that it’s a sorry situation that this is now being used against them.

PokerStars Suffers Alongside Other Online Operators

This is not the first time that the KSA has struck out against online gambling operators for serving Dutch customers without the necessary authority. A €300,000 fine was handed out to the popular William Hill brand for the same reasons in December 2018.

It is because of its supposed breach of the KSA rules that The Stars Group likely won’t be able to apply for a license from the regulatory body of the Netherlands. This is due to the fact that there is a necessary two-year cool-down period, which is imposed on operators who are at fault, by the Dutch government.

Though the Dutch regulated online gambling regime is not yet open, it's expected that applications for licenses will be accepted starting in July 2020 and the first licenses granted on Jan. 1, 2021. Assuming that PokerStars is put on some form of “bad actor” list, this could mean it won't be able to reenter the country until 2023 at the earliest.

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I Want to Play at PokerStars

PokerStars isn’t licensed to operate within the United States either although there are limited exceptions to that rule. To find out more about playing at PokerStars from the US, read our guide on safely playing at 'Stars while in America.