Staff have been told of layoffs
According to a report from Isle of Man Today, PokerStars has informed its employees that some of them will be laid off over the next two years.
A total of 80 staff members have been warned about the future of their jobs at the local offices of the world’s largest online poker room.
PokerStars has two offices on the Isle of Man, employing about 450 people. Ten employees will reportedly be let go by the end of this year. More layoffs are expected to follow over the next 18-24 months.
80 staff members have been warned about the future of their jobs
Spokesperson says cuts are necessary
“As we’ve previously noted, our international segment (PokerStars) has faced many headwinds over the last year, including disruptions in our key markets,” a spokesperson for PokerStars’ parent company, The Stars Group, told Isle of Man Today.
“As a result, we are pursuing operational initiatives, including cost-optimization initiatives, as we’ve done in the past, to reassess our fixed cost base and realign our costs with our global growth strategy,” the spokesperson explained.
The Stars Group believes that layoffs will help the company meet intermediate growth targets and ensure growth in the long run.
The representative added that Isle of Man operations should not be materially affected, aside from the trouble the actions will cause for the employees who lose their jobs.
Government will aid those affected
The Isle of Man Department for Enterprise, the economic development government agency, said that it is aware of the upcoming layoffs and will work to help those who lose their jobs.
It sounds like PokerStars discussed the situation with the Department, but the Department is hesitant to divulge any details to the public.
“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,” a Department representative told the Isle of Man Today.
Rough year for The Stars Group
The Stars Group has struggled this year, reporting second quarter earnings of 48 cents per share. This represents a 20 percent decrease from the same quarter a year ago.
Net revenues were way up on the quarter, increasing 55 percent from the second quarter of 2018. This was not from organic growth, though, but rather the result of the acquisition of Sky Betting and Gaming.
The “disruptions” in “key markets” mentioned by the PokerStars spokesperson had to do with gray markets, those jurisdictions in which online gambling was in a legally murky area.
The Stars Group and PokerStars often continued to operate in such markets, but many countries have tightened up their laws, forcing the company to exit those jurisdictions.
Traffic has been falling by double digits annually for about a decade
Online poker, the most visible of The Stars Group’s businesses, has been struggling for years, as well. Though PokerStars is still the world’s largest online poker room when combining all of its sites, PokerStars.com no longer holds the top spot in terms of cash game traffic. Traffic has been falling by double digits annually for about a decade.
As a result of its recent disappointing financial figures, shares in The Stars Group are near 52-week lows. The stock is currently trading at $15.43 per share, more than $10 less than its 52-week high.