The Downfall of PokerStars – No Longer the No. 1 Poker Site

Poker Stars Logo With a Red Arrow Pointing Down

For years, PokerStars has been known as the world’s largest real money online poker site. However, they’ve been slipping down the traffic rankings for years.

Their main site, PokerStars.net, has fallen behind IDNPoker in the traffic rankings. The latter currently commands 7,000 cash game players per hour. Stars still draws a respectable 6,100 cash players an hour. But they’re clearly in second place regarding traffic.

It’s important to understand that PokerStars’ player base is segregated across different markets. Therefore, they actually draw around 1,500 more grinders than IDNPoker when accounting for their worldwide market.

Even still, the fact that Stars’ main domain has fallen behind another operation is almost unfathomable. This is the same behemoth that, just a few years ago, was drawing over 20,000 cash players per hour and crushing every other site.

What exactly has caused Stars to fall this far? Will the freefall continue? You can find out by reading about the rise of PokerStars, their selfish corporate decisions, and where this site is headed.

Humble Beginnings for PokerStars

Stars was one of the first operators in the online poker space. Isai Scheinberg, an Israeli programmer for IBM Canada, began creating the software for PokerStars in the late 1990s.

He formed Rational Enterprises and moved his operation to Costa Rica. PokerStars would launch a short while later in December 2001.

At this point, Stars was just one of several options in the online poker world. It would take a backseat to PartyPoker, which was the market’s first real giant. PokerStars experienced its first real rise in the summer of 2003. They’d given away WSOP Main Event prize packages earlier in the year.

Chris Moneymaker, a Tennessee accountant and amateur player, was one of the Main Event satellite winners in 2003. He earned his $10k seat via a $39 PokerStars satellite.

Moneymaker would go on to win the Main Event and a $2.5 million prize. Stars marketed the hell out of Moneymaker’s victory and drew countless amateurs to the site.

Stars would still sit behind PartyPoker in terms of traffic. However, they were quickly making a move upward at this point.

How PokerStars Became the Player’s Choice

By the beginning of 2006, Scheinberg was quite pleased at his poker site’s quick growth. He commissioned London’s NM Rothschild bank to explore the possibility of selling the company.

Just five years after launch, PokerStars was already worth around $2 billion. William Hill and the Rank Group showed interest in purchasing the site.

Stars was leaning more towards floating on the London Stock Exchange. PartyPoker had floated for over $8.4 billion on the London Stock Exchange the year prior.

However, PokerStars’ aspirations of going public were thwarted in late 2006. The US passed the Unlawful Internet Gambling Enforcement Act (UIGEA).

This legislation makes it illegal for gambling businesses to take payments in states that prohibited online gambling. It didn’t technically outlaw online poker, but the UIGEA did make it much harder for sites to accept deposits.

The law would be a blessing in disguise of sorts for Stars. Having gone public in London, PartyPoker exited the US market due to their status as a public company.

PokerStars, meanwhile, was still owned by the Scheinbergs. They chose to remain in the US and take advantage of the wide-open market. Stars soon became the largest poker site in the world. The next several years would mark rapid growth and records.

Closeup of Chips and a Poker Hand

Speaking of the latter, they held the two biggest poker tournaments ever in 2009 (149,196 players) and 2011 (200,000 players).

They also pushed the limits for tourney prize pools with their World Championship of Online Poker (WCOOP) and Spring Championship of Online Poker (SCOOP).

Stars separated themselves in terms of promotions and VIP rewards, too. They regularly gave away big tournament prize packages, staged inventive leaderboard races, and offered some of the top rakeback deals.

Coming out of Black Friday on Top

PokerStars experienced major success due to their willingness to serve the US market following Black Friday. But they, along with several other prominent sites, worked with shady payment processors and banks to make this happen.

Judgement day would come on April 15, 2015, otherwise known as Black Friday. The US Attorney’s Office for the Southern District of New York indicted Isai Scheinberg, along with several figureheads at other top online poker rooms.

The end result is that PokerStars agreed to leave the US market and pay a $731 million fine. In exchange, they admitted no wrongdoing for serving US customers through illicit means.

The US exit hurt the site’s bottom line. Nevertheless, they were able to remain solvent and highly successful, something the bankrupt UB Poker, Absolute Poker, and Full Tilt Poker (later purchased by Stars) couldn’t do.

PokerStars Meets Wall Street

Stars continued to draw millions of players across the globe after Black Friday. However, PokerStars was having trouble gaining acceptance in certain regulated markets (notably New Jersey) due to the Scheinbergs’ ownership.

Isai mulled over selling the site because of his indictment and unsettled case. On June 12, 2014, he found a buyer in Amaya Inc. Backed by some of the biggest banks and Wall Street investors, Amaya purchased PokerStars for a record $4.9 billion.

Headed by the dashing David Baazov, Amaya promised to take PokerStars to new heights. The company envisioned making PokerStars into an online gambling giant that offered casino games and sports betting along with poker.

Amaya furthered their path towards internet gaming dominance by launching PokerStars Casino in 2015. Later the same year, they debuted BetStars.

Unbeknownst to PokerStars customers at the time, these two moves would mark Amaya’s relinquishing commitment to poker players.

VIP Changes and Increased Rake Alienate Players

PokerStars rode the online poker industry to the top. But under Amaya, they didn’t plan to continue banking on one game alone. The internet poker industry had been in a slow decline ever since Black Friday. The company felt that they needed to diversify and get away from their reliance on poker.

In doing so, they vowed to do whatever it took to increase profits, even if this meant hurting the very customers who fueled their rise.

By late 2015, PokerStars announced changes to their VIP program for the following year. The jest of the moves included high-volume grinders losing some of their rewards and low-volume players picking up a few additional rewards.

Stars got rid of the Supernova Elite (top VIP) level and capped the amount of rakeback that players could earn at 30% (down from 45%). They argued that these moves would let them redistribute more rewards to recreational players.

The net effect was an overall reduction of VIP benefits. Although recreational players received more rewards, this wasn’t enough to counteract the massive loss of perks in the top loyalty levels.

Cards and Chips on a Laptop Keyboard

Baazov would suffer through insider trading accusations in 2016. He’d eventually step down as CEO of Amaya. But the parent company, which later rebranded to The Stars Group, held the same vision. They emphasized profits and making changes wherever necessary.

PokerStars once again altered the VIP program in 2017. They slashed rewards for volume grinders and instituted more random rewards. The site once again cried that these moves were to benefit recreational players and reduce the incentive for mass multi-tabling regulations.

However, it should also be noted that PokerStars made multiple rake increases during the same time period. In the end, Stars turned off some professional and recreational players amid all of these changes.

Where Will PokerStars Rank in the Future?

I want to emphasize that The Stars Group isn’t necessarily wrong for focusing on all their gambling verticals. After all, the company has seen its profits increase ever since shifting more attention to casino gaming and sports betting.

However, PokerStars has definitely taken a large step back.

Their traffic has more than halved within the past few years. Part of this is due to the declining online poker industry. But another aspect is the way that Stars has treated its poker players.

Their VIP program changes and increased rake prove that PokerStars isn’t the player’s platform any longer. Instead, this site is just another moneymaking vehicle for The Stars Group.

As for the future, The Stars Group will likely keep bolstering their casino and sportsbook. They should also come out more profitable as a result.

But PokerStars will continue losing traffic. Technically, they’re still the world’s largest online poker site when considering all of their domains.

They’ll likely keep losing ground, though, and eventually give way to IDNPoker in total traffic. One day, PokerStars may even fall behind other sites as well.

Conclusion

PokerStars still holds a prominent place in the online poker industry. They’re also arguably the most important site in the game’s history.

They awarded the prize package that helped Chris Moneymaker win the 2003 WSOP Main Event. Stars cleverly marketed him to the public and increased overall interest in poker. They also forged ahead after the UIGEA and offered the biggest online poker tournaments in history.

However, PokerStars’ vision has changed lately under The Stars Group (formerly Amaya). They offer fewer all-around VIP rewards and have raised rake to boost company profits.

The Stars Group can’t be blamed entirely for seeking profits above all else. They are, after all, a business first. But many long-time customers feel abandoned due to the changes. Some of the same customers left the site for player-friendly online poker rooms.

Stars won’t be gaining market share back anytime soon. They’re stuck in a tough spot due to the industry’s decline and The Stars Group’s new vision.

Eventually, they may just be one of the top choices for online poker players. This is a far cry from when they were clearly the biggest and best poker site available.