Toronto-listed Amaya Gaming Group has agreed to purchase Rational Group Ltd, an Isle of Man-based business which owns the worlds largest online poker site, PokerStars, for $4.9 billion in cash.
Rationals Chief Executive Officer and owner of 75% of the business Mark Scheinberg, who pioneered the online wagering business together with his father Isai Scheinberg, will leave the company upon completing the purchase.
Mr. Scheinberg said in a statement: “I am incredibly proud of the business Isai and I have built over the last 14 years, creating the world’s biggest poker company. Our achievements and this transaction are an affirmation of the hard work, expertise and dedication of our staff, which I am confident will continue to drive the company’s success.”
Rational has more than 85 million users and managed to generate $1.1 billion in revenue in 2013 and EBITDA of $420 million.
Amaya believes the acquisition will abet the entry of PokerStars and Full Tilt Poker into regulated markets it already has stepped into, particularly in the US, after being forced out by the Justice Department in 2011.
The Justice Department, which maintained for years states couldnt legalize online gambling, charged Isai Scheinberg and ten other principals at three gambling companies with illegal gambling, bank fraud and money laundering, cracking down on the booming online poker industry. Isai Scheinberg, the founder of PokerStars, is under indictment in the US, but hasnt been arrested and remains out of the country. Shortly after the crackdown, however, the Justice Department switched stances and ruled out that states are free to legalize online gambling.
In an attempt to return to the US market, PokerStars agreed to pay $731 million in 2012 to settle the civil suit with the Justice Department and to buy a rival site, but hasnt admitted wrongdoing. Mark Scheinberg was appointed as Chief Executive Officer, while his father was prevented from taking a management role.
Since the settlement, Nevada, Delaware and New Jersey have legalized online betting but the company is still unable to operate there. In December 2013, New Jersey gambling regulators said PokerStars wont receive license to operate in the state for at least two years and would only reconsider, if the company demonstrated significantly changed circumstances.
David Baazov, chairman and CEO of Amaya Gaming, said US regulators will reconsider PokerStars application under the new management. He added, cited by Bloomberg: “Amaya is licensed in many jurisdictions, over 80 worldwide. This will be worked out on a state-by-state basis.”
Amaya Gaming Group Inc rose by 17.14% on Thursday in Toronto to close the session at 14.08 Canadian dollars, marking a one-year change of +138.64%. The company is valued at CAD 1.13 billion. According to the Financial Times, the 8 analysts offering 12 month price targets for Amaya Gaming Group Inc. have a median target of CAD 9.13, with a high estimate of CAD 12.00 and a low estimate of CAD 8.50. The median estimate represents a -35.19 % decrease from the last price of CAD 14.08.
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