Rumours Abound Over Possible PokerStars Sale

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Wednesday, June 11th, 2014 | Written by Lucy Brown

Over the past few months there has been a lot of speculation that PokerStars could allow itself to merge or be purchased in order to re-enter the US online poker market. William Hill, Steve Wynn, bwin.party and Amaya Gaming have all been cited as potential buyers of the site, and while these rumors may seem a little far-fetched there are plenty of reasons to suggest the world’s biggest poker room could benefit from such a deal. As an article on CalvinAyre.com, explained:

“As unlikely as it may sound sources have told CalvinAyre.com that an agreement is in place that would see Amaya assume ownership of the Isle of Man-based online poker colossus, thereby clearing the way for the Stars brand to return to regulated US markets.”

PokerStars shut out of USA

Following the passing of the UIGEA in 2006, PokerStars managed to grow into the online poker behemoth it is today by filling the void left by PartyPoker as it exited the US market. PokerStars was subsequently able to commandeer the company’s previous US customers to soon replace PartyPoker as the biggest online poker room on the planet.

In 2011, however, the UIGEA was reinterpreted to allow for online poker thus paving the way for PartyPoker’s return to a regulated US igaming landscape. Despite PokerStars since paying a $731 Million settlement deal with the DoJ for money laundering, the company has been saddled with a ‘bad actor’ label and continues to pay the price of its previous actions.

California the ‘jewel in the crown’

Regulated US online gambling is currently limited to just the states of New Jersey, Delaware and Nevada, which generated a mere $12,461,233 in combined revenues for April. While those figures are not particularly alluring for PokerStars, the company was disappointed to be turned down for a license in those states as it looked to become part of a nascent American igaming industry which one day might approach pre Black-Friday levels.

In the meantime, however, PokerStars has turned its attentions to the potentially lucrative Californian market which currently has no regulation but continues to see around $2.2 billion wagered each year on offshore, unlicensed websites. As a result, PokerStars has already agreed a partnership deal with California’s Morongo Band of Mission Indians, but has since encountered resistance from 13 of the state’s most powerful gambling tribes, who are determined to see PokerStars shut out of their market.

Mark Scheinberg looking for a successor

PokerStars founder Isai Scheinberg currently has an outstanding warrant issued against him by the US DoJ, leading to Mark Scheinberg taking over his father role last year. Recently, however, Mark Scheinberg has apparently been building up an executive team to reduce his role in the company with an eye on eventually finding a successor. If this rumour proves to be true then it is possible that he may be willing to sell the business.

A merger with Amaya Gaming?

Up until now Canada’s Amaya Gaming Group has been the company touted as the most likely to merge with PokerStars, a rumour that found a voice in the CalvinAyre.com article. Lending credence to the story is the fact Amaya has already acquired a number of online gaming companies, and is also currently licensed to offer online gambling in New Jersey.

Analysts have even reported that Amaya appears keen to trade up on its current Ongame network poker platform, and so far the company has neither confirmed or denied the suggestion. The rumours, however, were enough to cause a spike in the stock price of the company, which soared by 14% before later settling back to a 3% gain overall. The stock activity, though, was enough to invoke an official statement from the company, stating the following:

“In response to trading activity that may stem from market rumors that have come to the company’s attention regarding a potential strategic acquisition. Strategic acquisitions have been and are one component of the company’s growth strategy and, as such, Amaya regularly evaluates potential acquisition opportunities. From time to time, this process leads to discussions with potential acquisition targets. There can be no assurance that any such discussions will ultimately lead to a transaction. As a general policy, Amaya does not publicly comment on potential acquisitions unless and until a binding legal agreement has been signed.”

Needless to say the situation is not at all clear, but being a publicly traded company it is natural for Amaya to want to avoid a public discussion on the subject in order not to incur warnings from financial watchdogs. Therefore a potential sale may seem far-fetched but certainly is far from inconceivable.