888 Acquires Entirety of All American Poker Network
This week, 888 Holdings solidified its online poker vertical as the dominant poker provider in the new United States internet gaming market. The company acquired the outstanding interest in the All American Poker Network, also known as AAPN.
The $28 million purchase puts 888 in an influential position in the US as the only company that operates online poker in all three states that currently offer it – Nevada, Delaware, and New Jersey – and will be ready to launch in Pennsylvania in 2019 when that new market opens.
While PokerStars continues to dominate the world market and does have name recognition in the new US market, 888 has the advantage in America. 888poker has been on the ground with Caesars and the WSOP since the first poker site launched in Nevada in 2013. And AAPN is the force that has thus far connected online poker sites in Nevada, Delaware, and New Jersey.
AAPN Acquisition
On December 11, 2018, the deal was done. 888 purchased the remaining 53% of interest in the All American Poker Network for $28 million.
888 acquires remaining share of AAPN: Online gaming entertainment and solutions provider 888 has acquired, via its 888 US and 888 US Holdings subsidiaries, the remaining 53 per cent interest in All American Poker Network (AAPN) for US $28m. 888 described… https://t.co/bwZxUgwzal pic.twitter.com/HbW2HidFyI
— SBC GAMING (@SBCGAMINGNEWS) December 11, 2018
The agreement by 888 US and 888 US Holdings allowed it to acquire the majority of the company, which had been owned by Avenue OLG Entertainment and other minority shareholders. It was handled with $10 million this week and another $18 million that will be paid by March 31, 2019.
The purpose of the deal was to give 888 the flexibility to “deliver on multiple potential growth opportunities” in the US market. Its growth strategy includes new strategic partnerships, which have not yet been announced.
888 Chief Executive Itai Frieberger noted that the move was one that will help the company reach its long-term potential in America. “Taking outright ownership of AAPN gives 888 additional operational, technological and commercial flexibility to develop innovative and exciting new partnerships and launch in new states – through both B2B and B2C channels – as and when future regulation allows.”
More Than Five Years On
AAPN was launched in March 2013 to operate 888poker and 888casino sites in the United States. Avenue Capital Group was the primary investor in the 888 subsidiary AAPN, which was registered as a corporation in Delaware.
Originally, AAPN was to launch its own poker rooms and signed agreements with Treasure Island in Nevada, as well as Wynn Resorts. These were abandoned, however, as the realization that the Nevada market was not large or prepared to handle multiple online poker providers.
At that time, David Licht held the position of Executive Chairman of AAPN, taking that position after serving as the Senior Vice President of Avenue Capital US Funds. However, it appears that Licht is no longer with AAPN, and it is unclear who is heading up the US-based network.
US Online Poker in Slow Motion
The United States online gaming market has been slow to grow. While sports betting and daily fantasy sports (DFS) are soaring in popularity, states continue to be wary of online poker and casino games.
The hope for AAPN was that states would follow each other into the new online gaming space, and online poker sites would connect through shared liquidity across America, establishing a lucrative market upon which to grow. As it stands, however, few states are even considering online poker at this stage, more than five years after Nevada, Delaware, and New Jersey launched their sites. Pennsylvania is preparing to launch in 2019, but there are few other possibilities before 2020.
This doesn’t bode well for AAPN as a whole, which generated a loss of $3 million in 2017. The shared liquidity between New Jersey, Delaware, and Nevada has not drawn the crowds of customers that many experts anticipated. There is hope that Pennsylvania will give the shared market a solid boost, but talks with Pennsylvania about shared liquidity have not even begun as 2018 comes to a close.
Now that 888 owns AAPN outright, it will be interesting to see what plans they have in store for it.
