by Wendeen H. Eolis
Now that Amaya Gaming has completed its purchase of PokerStars, Isai Scheinberg and his son Mark, for whom he founded the company, are totally out. Daniel Baazov, Chairman and CEO of Amaya, and the architect of the PokerStars deal, is totally in. And today, U. S. gaming companies are better positioned to compete against the online behemoth, than ever before.
Not coincidentally, the management change has put PokerStars back in line for prompt licensing consideration by regulators in New Jersey. Less expected, however, are the kind words a Caesars executive bestows on the Amaya CEO. But, before a relationship between Amaya Gaming and American poker players moves forward in earnest, with plans to hook up online gaming in America from shore to shore, the Company will need to go through more than a few hoops.
PokerStars Train Rolling Across America
Things are looking up in New Jersey as PokerStars prepares to settle down, "suitably," in Atlantic City. The PokerStars partnership with Resorts is the talk of the town. New Jersey regulators are reportedly convinced that Poker Stars now deserves a welcome mat and are all but drooling over $$$ projected for the State. Wise casino executives, from the marina to the boardwalk are past their frustration over the anticipated competition; looking instead for the silver lining. Only die-hard naysayers are still warning, "It ain't over till the fat lady sings!"
In contrast, California is an unending battleground in the igaming world. Should PokerStars be admitted to the gaming party or should Poker Stars be excluded by a "bad actor clause;" that is the ongoing question. Casino industry lobbyists and legal experts at opposite ends of the pole have been opining on how to proceed with online gambling legislation. One side of the legal argument revolves around the Constitution. The other side invokes states’ rights that may effectively trump the Constitution. For lawmakers it is a classic case of Fiorello’s song, “Politics and Poker.” One online poker bill has just died on the vine. A second one threatens to face a similar fate, likely to push the debate down the road into 2015.
California, here we come—maybe
Earlier this month, longtime Whittier law professor and gambling law expert I. Nelson Rose took on Constitutional scholar and Harvard Professor, Lawrence Tribe. Rose rebutted Tribe’s legal opinion concerning the two online poker bills pending in the California legislature. Tribe challenges the “bad actor” clause in proposed legislation. Rose defends it. Tribe is advocating for a client. at Rose is engaged in an intellectual exercise .
Tribe relies on the Constitution to assail the “bad actor clause.” He says it is a pointed effort to cut out his client, PokerStars, from the re-emerging industry in the U.S. Proponents of the California-based bills, generally, make no bones about seeking to bar Poker Stars from entering the U.S market, anytime soon. And California lawmakers seem have plenty of like-minded company from Nevada to Pennsylvania. But Rose’s article sidesteps pointing fingers. He looks at the subject matter academically. He zeroes in on states’ rights, and police powers that provide for a state to protect its citizens, to make his argument that the bad actor clause is legally justified.
Rose’s Grandstanding Makes Sense!
Calling Out Sexism in Poker — Beyond Maguire, Molly’s Game, and “The Mouth” - by Wendeen H. Eolis
Featured Strategy - Mike Caro: Today's Word is Revenge
World Series of Poker Events 53 to the Main Event (#65)
AND MUCH MORE, Download the new Issue PDF now!
Acquisition Creates World’s Largest Publicly-Traded Online Gaming Company
(MONTREAL, CANADA & ONCHAN, ISLE OF MAN – June 12, 2014) – Amaya Gaming Group Inc. (TSX: AYA) (“Amaya” or the “Corporation”) and privately held Oldford Group Limited (“Oldford Group”), the parent company of Rational Group Ltd. (“Rational Group”), the world’s largest poker business and owner and operator of the PokerStars and Full Tilt Poker brands, announced today they have entered into a definitive agreement (the “Agreement”) for the Corporation to acquire 100% of the issued and outstanding shares of Oldford Group in an all-cash transaction for an aggregate purchase price of $4.9 billion (the “Purchase Price”), including certain deferred payments and subject to certain other customary adjustments (the “Transaction”). All $ figures are in US dollars unless noted otherwise.
KEY TRANSACTION HIGHLIGHTS
The Transaction will result in Amaya becoming the world’s largest publicly-traded online gaming company. The online poker platforms PokerStars and Full Tilt Poker are collectively the world’s most popular and profitable online poker brands with more than 85 million registered players on desktop and mobile devices.
For calendar year 2013, pro forma combined revenue, EBITDA and adjusted EBITDA of Amaya and Oldford Group were $1.3 billion, $474.8 million and $473.8 million, respectively. For 2014, the Corporation is projecting pro forma adjusted EBITDA, assuming the Transaction had been completed as of January 1, 2014, of between $600 and $640 million.
The Transaction combines complementary businesses with minimal overlap: Isle of Man-headquartered Rational Group’s B2C poker business including PokerStars, Full Tilt Poker, live poker tours and events, and online and TV poker programming; and Montreal-headquartered Amaya’s B2B interactive and physical casino and lottery gaming solutions.
Under the terms of the Transaction, Oldford Group shareholders led by Mark Scheinberg, founder and Chief Executive Officer, will dispose of their shares to a wholly-owned subsidiary of Amaya. Mr. Scheinberg and other principals of OIdford Group will resign from all positions with Oldford Group and its subsidiaries on completion of the Transaction.
Rational Group’s executive management team will be retained and online poker services provided by PokerStars and Full Tilt Poker will be unaffected by the Transaction, with players continuing to enjoy uninterrupted access to their gaming experience.
The boards of directors of both Amaya and Oldford Group unanimously approved the Agreement.
The Transaction will be financed through a combination of cash on hand, new debt, a private placement of subscription receipts, a private placement of common shares and a private placement of non-voting convertible preferred shares.
Affiliates of GSO Capital Partners LP (“GSO”), the credit division of The Blackstone Group (NYSE: BX), have agreed to participate in the debt financing, to subscribe for $600 million in convertible preferred shares, and to purchase $55 million of common shares of the Corporation with each common share priced at C$20 upon closing of the Transaction.
An investment manager (the “Investment Manager”), on behalf of its clients, has agreed to participate in the debt financing, to subscribe for approximately $270 million in convertible preferred shares, and to purchase approximately $55 million of subscription receipts.
No change related to this Transaction is contemplated for Amaya’s Board of Directors.
“This is a transformative acquisition for Amaya, strengthening our core B2B operations with a consumer online powerhouse that creates a scalable global platform for growth,” said David Baazov, CEO of Amaya. “Mark Scheinberg pioneered the online poker industry, building a remarkable business and earning the trust of millions of poker players by delivering the industry’s best game experiences, customer service and online security. Working with the experienced executive team at Rational Group, Amaya will continue that tradition of excellence and accelerate growth into new markets and verticals.”
by Haley Hintze
The Department of Justice-appointed administrator for the Full Tilt Poker remissions process, Garden City Group, released a second wave of refunds in early April. Almost $6 million in online-poker balances was sent to about 2,800 players whose banking information could not be verified in time for inclusion in the larger first wave of payments earlier this year. All told, GCG has issued about $81 million in FTP payment to date, with two large categories still under review – online affiliates and former players who enjoyed some form of sponsorship relationship with the site. The funds for the ongoing refunds came from the 2012 PokerStars settlement with the DOJ, which acquired Full Tilt’s remaining assets in exchange for the remission funding.
by Haley Hintze
Negotiations between competing California tribal-casino factions over differences in language in rival Cali intrastate online poker bills have fallen apart over allegations that PokerStars may be negotiating to at least one tribe and two major independent cardrooms. A 12-tribe group led by the state’s Pechanga and Agua Caliente bands issued a public statement against PokerStars and its parent Rational Group, demanding that a “bad actor” provision, designed to block PokerStars, be included in any California i-poker legislation. The rival Morongo tribal nation and the Commerce and Hawaiian Gardens card rooms have been named in media reports as negotiating with Stars for software services. PokerStars paid more than $500 million to resolve its federal “Black Friday” case but admitted no legal wrongdoing, and would currently be subject to approval by California gaming regulators rather than being blocked by a Cali i-poker bad-actor provision.
by Haley Hintze
Twin Congressional measures seeking to reinvigorate the 1961 Wire Act and thereby make illegal most forms of Internet gambling, including poker, have been introduced in Congress. The bills, submitted by US Sen. Lindsey Graham (R-SC) and US Rep. Jason Chaffetz (R-UT), originated with the deep backing of billionaire casino magnate Sheldon Adelson, the CEO of Las Vegas Sands Corporation, which operates the Venetian and Palazzo in Las Vegas. The preliminary forms of both bills were written by a federal lobbyist funded by Adelson, who hopes to curtail Internet-based competition to his existing land-based casinos. Both new Congressional measures, denoted as S. 2159 and H.R. 4301, respectively, have been sent to Congressional committees.
Poker News Briefs: Utah House Investigation Reports Probable Felonies Linked in Online Poker MattersMarch 24, 2014 - 11:20am
by Haley Hintze
Utah House Investigation Reports Probable Felonies by Former State AG, US Senators Linked in Online Poker Matters – A 206-page report issued by a Utah House-authorized investigative panel in mid-March has asserted that former state Attorney General John Swallow may have committed as many as eight different felonies in a wide-ranging series of allegations with ties to the “Black Friday” online-poker processing conducted through a St. George, UT bank. Central to the investigation’s findings are evidence obtained from indicted Utah online marketer Jeremy Johnson, an unindicted, but important figure in the Black Friday affair. A secretly taped conversation of a meeting between Johnson and Swallow includes admissions of suspect behavior by Swallow, who resigned in November, and also includes the Johnson-alleged assertion of a million-dollar bribe paid through back channels to US Senate Majority Leader Harry Reid (D-NV) through back channels. The investigation into Swallow, led by two Utah county prosecutors, also includes the links to Reid and to US Sen. Mike Lee (R-UT), but without formal federal assistance. According to the two Utah prosecutors, their request for the FBI to investigate Reed’s and Lee’s possible connections was blocked by the US Department of Justice.
by Haley Hintze
Full Tilt Remissions Administrator Wires $76M in Refunds – DOJ-authorized claims administrator Garden City Group has delivered the first wave of Full Tilt Poker refund payments to US players whose bankrolls on the online site have been in limbo since April, 2011. On February 28th, GCG sent a total of about $76 million to more than 27,500 former FTP players. The mass refunds represent the first of several payment waves to be issued by GCG over the coming months, and represent those players who accepted the balances shown in Full Tilt’s system without protest. Players with disputed balances and players who enjoyed either affiliate or rakeback relationships with the site, which was at one time the second-largest US-facing online poker offering, are subject to lengthier, individual review.
by Haley Hintze
A new lobbying group favoring the regulated oversight of online poker and gambling has debuted. The new Coalition for Consumer and Online Protection (C4COP) is funded by MGM International with support from the American Gaming Association. C4COP was created to counteract the anti-online push of CSIG, with C4COP immediately announcing a $250,000 media buy, primarily around Washington, D.C., to promote a pro-online political agenda. Among the political figures already signed to front the group are former GOP Congressmen Mike Oxley and Mary Bono and former Obama administrative staffer Jim Messina.
by Haley Hintze
Pennsylvania Pols Announce Support for Online-Gambling Ban – Three Pennsylvania state legislators have announced support for a yet-to-be-introduced piece of legislation that would criminalize the playing of online poker and other forms of online gambling. The statements by State Sen. Mario Scavello and two others propose summary fines and misdemeanor penalties for playing poker and other forms of gambling online, and if enacted would make Pennsylvania only the second US state where playing online poker is regarded as criminal. (The state of Washington passed a felony law in 2006.) The LV Sands-funded Coalition to Stop Internet Gambling (CSIG) immediately hailed Scavello’s proposal; Scavello’s PA district, coincidentally, is adjacent to the one where the Sands-owned Sands Bethlehem casino is located.