Posts Tagged ‘amaya’

Big Gambling Brands Dying by Way of Netflix?

Saturday, November 22nd, 2014

CVC Capital Partners, the largest private equity firm in Europe, has recently given their vote of confidence on behalf of the online gambling industry. The private equity investors agreed to purchase a hefty controlling stake in the online gambling company, SkyBet. In fact, it was the largest purchase made by private investors in the quickly changing industry that is iGaming. At a sizable $1.25 Billion, this purchase secured for CVC Capital Partners is roughly 80% of SkyBet.

Seeded by the UK’s Sky Satellite Broadband Company (much beloved for their SKySports sector), SkyBet initially made it’s mark via online sports betting, and has since established itself in the realms of online poker and other online casino games. Having such a robust and respected private equity firm place it’s bet in favor of the company says a great deal about the shift that is taking place in general perception concerning the online gambling industry’s ability to be a thriving, dependable economic powerhouse.

This shift can be observed in multiple similar investments and partnerships that have begun to dot trade publications in recent years. For instance, when software conglomerate, Amaya, made their $4.9 billion buyout of the popular PokerStars, the credit division of the world’s largest private equity firm, Blackstone Group, backed the deal with a $1 billion credit line. This groundbreaking change in how mainstream business regards online gambling put banking heavyweights like Deutsche Bank and Barclays in the position of holding assets rooted in the online gambling industry. Not surprisingly, Amaya’s shares have enjoyed a swift upswing since.

What is of main interest here is the somewhat less hearty investment being made by private equity into the online division of the land-based casino giant, Caesars Entertainment. It has yet to be confirmed if this is a reflection on the current struggle Caesars’ finds itself in, or if it is a preference for the specialization that companies solely focused on online gambling offer. For example, which company would likely woo more investment at this point? Twitter, or a new Short form social media product created by Microsoft?

Well, it probably wouldn’t be going out on a limb to say that Twitter would win due to its advantage of having established the first product of this nature (nor ro mention the fact that all of the company’s assets are focused in that single area). This preference differs a great deal from the original predictions that land-based casinos would overwhelm the online market and take over with brand power.

Could land-based casinos go by the way of Blockbuster vs Netflix ? Luckily, given that Caesars is already working to get ahead of the curve, they are more likely to ensure their survival in a digital future. Other land-based companies do not seem to be quite as prepared. One way or another, a simple prediction to make is that as the world’s money holders become invested in the success of online gambling, the governmental resistance to the legalization of it will surely wither.

Amaya Buys PokerStars for $4.9 Billion

Saturday, June 14th, 2014

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.