In efforts to re-enter the US poker market, PokerStars agrees sale to Canadian gaming supplier Amaya Gaming for $4.9 billion.
Amaya Gaming completes a deal to become the world biggest online poker firm after a $4.9 billion purchase of Pokerstars. Many observers see the acquisition as a way to re-enter the US market as they have previously had differences of opinion with certain government departments, namely with the US Department of Justice.
The DOJ claimed that PokerStars violated the codes of the Wire Act, which prohibits certain gambling activities. PokerStars eventually relocated its headquarters to the Isle of Man, off the coast of UK, but continued the legal battle with the DOJ.
The company enlisted the services of some insightful attorneys and law firms that challenged the decision by the DOJ. They claimed that PokerStars did not violate any US gambling laws.
Subsequently, PokerStars made its mark in the US by taking over the biggest online poker market in the world. Soon after President George W. Bush signed the Unlawful Internet Gambling Enforcement Act, which spelled the end for PartyGaming in the US. Nevertheless, PokerStars continued to operate in the US, while Full Tilt claimed the whole market.
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In 2011, US federal prosecutors challenged PokerStars’ gambling operations in the country. US Attorney for the Southern District of New York, Preet Bharara, charged the founder of PokerStars along with 10 other relevant individuals.
The founder, Isai Scheinberg, was one of the people accused of money laundering, bank fraud and most importantly providing illegal betting services. PokerStars took in bets and staged online poker tournaments on a regular basis.
The US Attorney claimed that Scheinberg and others went against the Unlawful Internet Gambling Enforcement Act of 2006, which makes it illegal for companies to accept bets online where it is not deemed legal.
Following the indictment, PokerStars relented in their legal battle in 2012 and agreed to pay a settlement fine of $731 million to the Department of Justice. Despite paying the hefty fee, the poker firm did not admit any wrongdoing to the charges brought against them.
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Gambling news reports that since the onset of the legal charges Scheinberg has been living on the Isle of Man. His son Mark Scheinberg makes regular visits to the US to keep track of further business and legal developments.
The Department of Justice has labelled Isai Scheinberg as the main “founder, owner and principal decision-maker for Pokerstars.” They also consider the mobile gaming founder as being “at large.”
Amaya Gaming disagrees with the statements made by the DOJ. The company has made an official announcement after the sale, stating that poker site was started and run by the son, Mark Scheinberg, and not the father. Mark also expressed his version by commenting, “I am incredibly proud of the business Isai and I have built over the last 14 years.”
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Amaya Gaming primarily deals with supplying betting equipment and hardware for other gaming firms, however the purchase of PokerStars will potentially see it become the greatest online poker provider. Currently, the industry is estimated to be worth a staggering $4 billion while Amaya seeks to hold a significant portion of that through PokerStars.
To help broker the deal Amaya has hired the financing services of several prominent banking institutions. Deutsche Bank AG (DBK), Barclays Plc (BARC), Macquaire Group Ltd. and Blackstone Group LP were all involved in providing their expertise.
In order to make the purchase, Amaya had to take out huge loans from the aforementioned banks. Billions have been borrowed, however considering the future potential for online poker in some states it appears to be simply a matter of time before they make a substantial return on their investment.
Amaya Chairman and chief exec, David Baazov, indicated the importance of acquiring PokerStars for the US market. “Having this brand and this company in the US is going to be very significant for states.”
Baazov has been credited with transforming the company into what it is today. He joined Amaya in 2006, two years after it was initially founded, and after successful acquisitions of smaller firms he saw Amaya’s growth rise exponentially.
Baazov commented on the company’s effective business model. “Everyone had a very fragmented approach. We built it all on a vision of convergence. It’s a very large industry and it’s going to continue to grow.”
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