Amaya Reaches Historic Agreement to Purchase Rational Group; PokerStars NJ to Follow?
In an unparalleled display of aggressiveness, the Amaya Gaming Group has purchased the Rational Group, and those two little poker sites that come with it, for the staggering sum of $4.9 billion.
As early as May 24, CalvinAyre reported that “those guys who purchased Ongame” back in 2012 were in the market for a much bigger fish. Supporting this theory were unprecedented leaps in the company stock that saw it skyrocket from $6.59 on May 14 to $9.95 on the 27th.
Then, earlier this week the stock surged upwards again, gaining 29 percent over a two-day span before trading was halted on Thursday. While this was going on, Bloomberg announced that the Blackstone Group was preparing to extend GSO $1 billion in credit to finance the PokerStars acquisition.
The rumors would finally be confirmed Thursday night, when Amaya posted a press release announcing that it has entered into a deal to acquire the entirety of the Rational Group.
We examine the details of the historic deal, and the possible implications it has for New Jersey’s iGaming industry.
The nitty gritty of the Amaya / Rational deal
Amaya had no reservations in announcing that it will become the “world’s largest publicly-traded online gaming company,” while also pointing out that together Full Tilt Poker and PokerStars boast 85 million registered accounts worldwide. With pro forma combined revenue at $1.3 billion in 2013, I’d be hardly inclined to disagree.
Both companies will retain headquarters in their respective locations, with Rational remaining in the Isle of Man and Amaya in Montreal.
All issued and outstanding shares held by the Rational Group’s parent company, the Oldford Group, will be acquired by Amaya, including those of Rational Group CEO Mark Scheinberg.
Furthermore, Mark Scheinberg and principles of Oldford will “resign from all positions with Oldford Group and its subsidiaries on completion of the transaction.” Remember that one U.S. poker players, as that’s the sticking point that will likely affect you the most.
Otherwise, Rational will retain its executive management team. That’s good news, considering a complete overhaul would likely interrupt PokerStars’ and FTP’s service temporarily.
In terms of the numbers, GSO will finance $600 million of the transaction in convertible preferred shares, and purchase another $55 million in common shares.
Vested parties react
The biggest winner in the acquisition was clearly Amaya CEO David Baazov, who in one fell swoop transformed his respectable mid-level gaming company into something on par with, oh I don’t know…Caesars Entertainment.
In a statement posted as part of the press release, Baazov commended Scheinberg for his contributions to the online poker community, and reassured the public that Amaya would be working intimately with “the experienced executive team at Rational Group.”
In this analyst’s mind, it’s largely beneficial that the individuals guiding PokerStars direction (sans Scheinberg) will continue to do so. There’s a reason why PokerStars is the number one online poker brand in the world, and it has little to do with luck.
Scheinberg offered similarly positive sentiments, citing confidence in Baazov’s “strong vision for the future of the Rational Group.”
But perhaps the most notable statement was the following:
“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.”
And guess where Amaya has planted one of its big footprints – right in New Jersey.
Possible implications of an Amaya owned PokerStars for New Jersey
As most online poker aficionados hailing from the Garden State already know, PokerStars license application was suspended by the state’s regulatory committee – the Division of Gaming Enforcement – for a period of two years.
However, as a stipulation of the suspension the DGE cited that should certain circumstances be met – namely, the removal of Isai Scheinberg and others involved in the gaming operations of PokerStars post-UIGEA – that the committee would reconsider PokerStars suitability.
The time for reconsideration is here!
It appears that PokerStars, who already forged a partnership with an Atlantic City-based casino in Resorts, will coerce its way back into the good graces of the DGE rather quickly.
Whether that means its application will be renewed next week, next month or next year is largely unknown. But for all intents and purposes, it seems probably that Stars will make its way back to the U.S.
Possibly expediting matters is the fact that NJ’s current operators have grossly underperformed expectations. While technological and payment processing hiccups plagued the state’s online poker rooms from the start, they haven’t been doing themselves any favors through their lackluster clients, high rakes and pedestrian player loyalty programs.
Perhaps the looming threat of a PokerStars dominated market will convince NJ’s existing sites to push harder. In either case, it’s hard to imagine PokerStars not being the front-runner in any market it enters.
Stay tuned for more on this developing new chapter in PokerStars’ history as it unfolds.
