Amaya PokerStars Purchase A Catalyst For US Igaming Renaissance

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Monday, June 16th, 2014 | Written by Lucy Brown

This week the gaming industry learned that Amaya Gaming has agreed to purchase the Rational Group, parent company of PokerStars and Full Tilt Poker, for a staggering $4.9 billion. Not only is the deal expected to give the Canadian maker of gambling equipment and systems a huge financial boost but it is also expected to transform the whole worldwide online gaming industry. As Amaya CEO David Baazov, explains:

“Amaya believes the Transaction will expedite the entry of PokerStars and Full Tilt Poker into regulated markets in which Amaya already holds a footprint, particularly the U.S.A.”

PokerStars’ US Adventure

The transaction, which actually involves the purchase of the Oldford Group (parent company of Rational Group), is expected to be completed by September 30th, after father and son founders Isai and Mark Scheinberg decided to walk away from their business, albeit several billion dollars wealthier.

PokerStars managed to grow into the world biggest online poker room by continuing to service the American market following PartyPoker’s withdrawal in the wake of the 2006 UIGEA. Nevertheless, the company has since been labelled a “bad actor” and an outstanding DoJ warrant still hangs over the head of Isai Scheinberg, effectively shutting PokerStars out of the lucrative US market. The poker room subsequently agreed a $731 million settlement with federal prosecutors in 2012, but Isai Scheinberg had to resign from working for PokerStars, and the latest deal with Amaya will also see Mark Scheinberg resign once the deal has been completed.

Amaya looking to re-enter the United States

PokerStars enjoys a virtual monopoly of the online poker industry, with tracking site PokerScout showing the site enjoying an average of 18,500 cash game players at any one time, with 888poker a distant second with just 1,900 players. Last year, PokerStars generated $1.1 billion in revenues and an EBITDA of $420 million.

Nevertheless, being isolated from the US online poker market limits the company’s potential for expansion, even though Nevada, Delaware and New Jersey have yet to realize their original pre-regulation forecasts. With the US expected to help grow the global online poker market to $6.8 billion within the next few years, it then becomes even more imperative for PokerStars to tap into the huge source of additional revenues.

Pre-Black Friday much of online poker’s popularity in the US can be attributed to the success of the PokerStars and Full Tilt Poker brands, and Amaya is now hoping its deal to purchase the sites will excite US players and help restore the country’s industry to its former glory. Although a return to the USA is by no means a certainty, Amaya believes the Scheinbergs no longer being a part of the company will help expedite its entry. In addition, Amaya already holds a license to provide online gambling in the regulated New Jersy market, and as CEO Baazov, explains:

“Rational does not currently operate in the United States, and we anticipate that Amaya’s track record in the United States has the potential to facilitate a speedier entry of the Rational’s brands into the US, an entrance that would certainly be welcomed by players.”

Amaya to introduce online casino games

So far, however, PokerStars, has limited itself to just online poker, a market worth around $4 billion at this present time. By introducing a range of casino games to the site Amaya predict they could gain access to global market worth around $25 billion rising to $42 billion by 2018, according to an H2Gambling Capital study. As Amaya CEO David Baazov, explains:

“With the continuing trend of online gaming regulation around the world, the company has in front of itself an enormous opportunity to leverage its brand recognition and customer loyalty to diversify into other gaming verticals as casino, sports betting and social gaming.”

Currently the Rational Group has more than 85 million registered players spread out between PokerStars and Full Tilt, which can be used to help support the company growth. Furthermore, Amaya is also hoping to enter the sports betting online gaming market in 2015, allowing it access to a huge $17 billion industry.

“[Rational’s] companies do not only have the ability to attract new players, but they are also able to offer popular tables and slot games to their millions of players using their poker platforms.. We estimate we can become a strong operator in the [sports betting] market in a few years, keeping the existing online poker players form spending their dollars on other sports book operators.”