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PokerStars parent company acquired by Canadian firm in $4.9 billion transaction

13 June 2014

By Howard Stutz

A Canadian online gaming company has agreed to acquire the parent firm of PokerStars in a $4.9 billion transaction, but there are several hurdles to climb before Nevada gamblers could see the popular Internet wagering site on their computer screens.

Amaya Gaming Group Inc. of Montreal said Friday it will purchase the privately held Oldford Group Ltd., the parent company of the Isle of Man-based Rational Group Ltd., which owns and operates the PokerStars and Full Tilt Poker brands.

In a statement, Amaya said the deal, which still needs approval from its shareholders, will make it the largest publicly traded online operator of casino games.

PokerStars and Full Tilt Poker have more than 85 million registered players on desktop and mobile devices.

Neither Amaya nor PokerStars are licensed in Nevada.

In a statement, Amaya said the deal would “expedite” the entry of PokerStars and Full Tilt Poker into regulated markets in which the company already holds a footprint, particularly the U.S.

PokerStars has been shut out of Nevada’s online poker business because the state’s interactive regulations include a five-year ban on companies that accepted Internet bets from Americans after the 2006 passage of the Unlawful Internet Gambling Enforcement Act, which made financial transactions for online gaming illegal. The language was dubbed as a “bad actor clause.”

PokerStars pulled out of the United States in April 2011 following the indictment of its founder, Isai Scheinberg, and two other company officials on fraud and money-laundering charges.

Sixteen months later, PokerStars settled its civil case by forfeiting $731 million. The agreement required Scheinberg to cease any managerial role at PokerStars. The Justice Department absolved the company of wrongdoing in accepting Internet wagers from American gamblers for the five years after the act became law.

Federal authorities didn’t prohibit PokerStars from entering legal U.S. gaming markets but state gaming regulators took an opposite view.

New Jersey gaming regulators considered a “bad actor clause” but dropped the idea. Regulators expressed their disapproval toward PokerStars when the company tried to buy the Atlantic Club last year. That deal fell apart. PokerStars later agreed to be the online gaming partner with Resorts Atlantic City, but the arrangement went nowhere.

New Jersey’s Division of Gaming Enforcement suspended the Rational Group’s casino service industry license application for two years.

In an interview with Bloomberg News, Amaya Chairman and CEO David Baazov said he was confident U.S. regulators will consider PokerStars differently under new ownership.

“Amaya is licensed in many jurisdictions, over 80 worldwide,” he said. “This will be worked out on a state-by- state basis.”


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Howard Stutz
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