David Baazov Showed Courage and Vision in Buying PokerStars, But Faces Serious Challenges
Amaya Gaming Group shareholders yesterday approved the purchase of the Oldford Group, the parent company for PokerStars and Full Tilt Poker. Last month, the Canadian gaming software company made a stunning $4.9 billion purchase of the Oldford Group. Shareholders also approved a rebrand of the company to Amaya Inc., for the stated “reasons of simplicity.”
The next step for Amaya Inc. is to seek licensing for its famous gaming franchises in the United States. PokerStars and Full Tilt are the most successful online card rooms throughout most of the world, but they have spent the better part of the last half-decade mired in legal issues in the United States.
That was a nuisance before New Jersey, Delaware, and Nevada decided to legalize, license, and regulate online gambling in their states. After that decision, PokerStars and Full Tilt are barred from competing against the legal competition. If David Baazov, Amaya’s CEO, can change those circumstances, then his investment in Rational Group looks even better than it does right now on paper.
“Phenomenal and Overwhelming Support”
If the recent shareholders meeting is any indications, Baazov should have the unqualified support needed a CEO who just pulled off an industry-changing coup would want.
Mr. Baazov said he was happy with his shareholders’ “phenomenal and overwhelming support“. On Wednesday of this week, the Isle of Man’s gaming regulators approved the purchase. Another 12 to 15 gaming jurisdictions have given their approval for the purchase, allowing Amaya Gaming into their regions.
Meanwhile, Toronto Stock Exchange gave its conditional approval to the $4.9 billion purchase. With round approval being given across the full spectrum of jurisdictions, it is looking more and more like the target date of September 30 for finalization of the transaction is realistic.
Amaya Inc. Stock Rocketed Up
Amaya Gaming Group’s stock price has risen 350% since the sale was first announced. Shares now trade at over $29. Several stock analysts have suggested the price is still undervalued. Ralph Garcea, an analyst for Global Maxfin Capital, says the price could go to $35 by the time Amaya returns PokerStars to the American gaming market in New Jersey.
With the purchase of Oldford Group, PokerStars and Full Tilt Poker will become publicly traded companies, instead of private firms. This could present new challenges for David Baazov as he continues to push his new assets into a sometimes-harsh US gaming market.
Publicly-Traded Company Concerns
Now that PokerStars is going to be tied to shareholder concerns with quarterly reports, it’s uncertain how aggressive online poker’s new biggest CEO will be. To buy Oldford Group, Baazov had to receive financing from some of the world’s largest private equity firms. These companies are not known for their patience, so Baazov will have to show soon he can deliver on promises to open legal doors in the United States.
Licensing Issues for PokerStars
The licensing process for PokerStars in New Jersey has been suspended, though the gaming regulators there appear to be the most-eager to allow the world’s largest Internet card room into their market.
PokerStars has a deal with Resorts Casino to launch poker and casino sites, but New Jersey regulators wanted to see PokerStars settle its differences with U.S. federal agencies, stemming from the Black Friday scandal. The purchase by Amaya Inc. should clear up most of those problems.
Bad Actor Laws in Nevada
Matters are more troublesome in Nevada, California, and Pennsylvania. Nevada has legal online gambling, like New Jersey, but regulators there are enforcing “bad actor” laws to keep PokerStars out of the state.
California and Pennsylvania Debate PokerStars
California does not have licensed online gambling, but the state’s lawmakers are debating a law to allow poker sites. A good bit of the debate is whether a bad actor law should be passed–a law specifically designed to keep PokerStars out of the state.
Pennsylvania is also considering a Internet gaming statute, but the proposed bad actor law in that state is even more wide-ranging. One suggested statute would be any company which accepted US players after passage of the UIGEA law, meaning PokerStars would never get into Pennsylvania.
