How Risky Is Amaya Gaming’s $4.9bn PokerStars Deal?

After years of steadily building up his company, Amaya Gaming CEO David Baazov surprised the gambling industry last month by announcing a $4.9 billion deal to acquire online poker giant PokerStars. While some analysts have pointed out the risks involved in taking on such a huge debt load, Mr. Baazov says he is confident the move will prove a lucrative one, stating:

“The focus is to grow the sector. The exciting part of this company [Rational Group Ltd] is that it comes with 86 million customers. Not 86 million gamblers specifically; 86 million customers.”

Up until now PokerStars has opted to concentrate on just offering poker, a game predominated by skill, but after the Amaya Gaming deal goes ahead towards the end of September the poker room will break with tradition and start offering casino games to its vast horde of customers. This is integral to Amaya Gaming’s strategy going forwards because whereas the global online poker market is presently worth around $4 billion, online casino games have a worldwide value of $25 billion. The future could also see sports betting, a $17 billion industry, added to the mix, which could help further explode the $1.1 billion in revenues The Rational Group generated last year.

Commenting on the far-reaching implications for PokerStars, Frank Legato, editor of Global Gaming Business, explained: “Will Amaya’s other worldwide revenues, including PokerStars, be enough to finance the new debt the company is incurring?” With 86 million users “I’d say it’s a pretty good gamble.”

Furthermore, after the acquisition is completed investors will be offered the chance to buy shares in Amaya Gaming. The company is currently listed on the Toronto Stock Exchange, but a dual listing is planned to include the London Stock Exchange, too, and as an Amaya statement read, recently:

“London would be a likely target, however. Given the UK’s central role in the online gambling world, it’s a natural home for Amaya. In addition, many of the world’s largest gaming companies are traded as part of the gambling sub-sector there, including 888, Ladbrokes, William Hill and bwin.party.”

Responding to whether Amaya’s success was reliant upon PokerStars being granted a USA online gambling license, Baazov said “poker is going to grow regardless of the U.S” and that the company would also be concentrating on the lucrative Asian and European markets. Nevertheless, the Amaya CEO expressed optimism PokerStars would still shed its “bad actor” label and once more become a dominant force in US online gaming.