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Amaya Buys PokerStars for $4.9 Billion

14 June 2014 by Devon Chappell

PokerStars_AmayaThe deal is sealed, and what a deal it is. The online gambling industry has been anticipating an announcement soon, and it certainly got one: Amaya Gaming has purchased the PokerStars online poker brand for nearly $5 billion.

Due to the online poker brand’s historical legal drama, Mark Scheinberg (whose father remains under indictment in the US), has been declared a new billionaire. More precisely, he’s a billionaire a few times over, as Poker Stars agreed to be purchased for $4.9 billion in cash.

Poker Stars is based in the UK (Isle of Man) and was being operated by parent company Rational Group Ltd. before the sale to Canada’s Amaya Gaming Group Inc. Scheinberg is Rational’s CEO and owns 75% of company. In the deal, Scheinberg will leave his post at Rational upon completion of the transaction.

It can easily be argued that this father-and-son team was one of the first major companies within the online gambling industry. While internet wagering was around before PokerStars began offering online poker in 2001, the online poker brand now has more than 85 million registered online users from all corners of the planet.

Rational netted around $420 million after paying various taxes, interest and other fees from $1.1 billion in gross earnings during 2013, which is an impressive sale, considering Poker Stars’ “checkered” past of taking illegal wagers from US players before the US passed definitive online gambling laws. Many industry insiders would say that several brands were caught up in the gray area of online waging in the US during that time.

PokerStars Legal Issues

Poker Stars was certainly just one of a large number of online gambling companies taking real money wagers from US players while the analysis of US online gambling laws was being examined and argued in courts.

A little over 3 years ago, the US Attorney for the Southern District of New York charged Isai Scheinberg and 10 other company big wigs (from other gambling sites) with money laundering, illegal gambling and bank fraud. Fallout from the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which took place that April, prohibited companies from accepting payments for real money online wagers (later overturned by a DOJ ruling on the 1969 Wire Act).

After the massive crackdown, PokerStars settled for $731 million in 2012 to have charges dropped. The deal, interestingly enough, cleared the online poker giant of any wrongdoing within the eyes of the Justice Department. And yet, Poker Stars has been shunned in the US since then – most recently by the state of New Jersey, which suspended Poker Stars’ online gambling application for 2 years.

This new acquisition is most likely engineered in some part to boost the brand’s reputation for a much desired reentry into the burgeoning US market.

Since the settlement and subsequent advancements in online wagering activity in the US, Nevada, Delaware and New Jersey have launched online casino sites of their own. Clauses deemed “bad actors” in these states, however, exclude companies involved in the 2006 UIGEA crackdown.

The Chairman and CEO of Montreal-based Amaya stated that he is convinced US regulators will consider PokerStars in a different way under the new ownership.

Amaya holds licensure in several gambling markets throughout the world. We’re talking eighty different markets, folks, which is a big deal indeed. If you thought you’d seen the last of Poker Stars in the US, think again.

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