What Does Amaya Gaming’s Purchase of PokerStars Mean for New Jersey Online Gaming?

News is still fresh that Canadian gaming software company Amaya Gaming Group is set to buy the parent company of PokerStars. As rumors swirl of a record $4.7 billion buyout, Amaya Gaming shares are receiving a major bump. The company announced the deal will be final on September 30, 2014, but the profits will be accretive immediately. The announcement of the purchase touched off a frenzy for investors, as Amaya Gaming shares increased a record 41%, up to C$19.78.

The purchase is going to change the face of online gaming throughout the globe. Amaya Gaming Group immediately vaults from a respected supplier of casino, sportsbook, and poker room software to whole other level. Amaya Gaming Group now has access to 85 million online poker players, while PokerStars and Full Tilt Poker will now be controlled by a company that long has a global scope, but sees life from the perspective of North America.

Now, Amaya Gaming is the #1 online gaming company in the world. But what does the deal mean for licensed online gaming in New Jersey?

North American Gaming Ties

With its headquarters in Canada, Amaya Gaming Group will not be quite as Euro-focused as the Rational Group/Oldford Group was. Certainly, members of the Commonwealth of Nations like Australia and New Zealand will get their share of attention, but the United States and Canada are going to be at the top of the agenda.

The company is likely to focus on expanding the scope of its reach in Canada and the United States. Canada should take care of itself, but matters are much more complicated in the United States.

PokerStars Troubles in the USA

PokerStars has a love/hate relationship with the American gaming market. A big part of PokerStars’ rise to ascendancy is due to its American marketing ventures. Before 2003, the Isle of Man based online poker company owned one of the top sites in the world, but it was still behind other competitors. PokerStars began sending a lot of entrants to the World Series of Poker Main Event each year in Las Vegas, paying the $10,000 entry fee for those who won onlike poker tournaments called satellite events.

In 2003, one of these satellite event winners, Chris Moneymaker, won the WSOP Main Event. This was a boon for PokerStars. The next year, Greg Raymer did the same. The Moneymaker victory (along with WPT and WSOP on television) started the Poker Boom in America. PokerStars was synonymous with online gambling to a huge segment of the American online poker community. PokerStars also had a nice, easy-to-use poker interface, so it surged to number one and never looked back.

UIGEA and Black Friday

When the UIGEA was enacted in 2006, PokerStars was one of a number of leading online poker sites which stopped accepting American players. By early 2007, the poker boom was officially over in the USA. Yet PokerStars continued to dabble in the market, investing in US banks which would help to shield player accounts, so they wouldn’t immediately appear to be gambling related.

A U.S. federal court in New York decided this was illegal, that such activity amounted to money laundering. On Black Friday in 2011, PokerStars and Full Tilt Poker saw their domains seized and U.S. assets frozen, and top-ranking executives were indicted. In 2012, PokerStars paid over $700 million to the U.S. authorities to settle the money laundering case, but this did not put everything behind them. The American law enforcement still wanted to settle with a few executives in the PokerStars management team.

This is the reason New Jersey gaming regulators suspended an online gaming license application submitted by PokerStars/Resorts Casino late last year. It’s why Nevada would not allow PokerStars to receive an iPoker license, and why the legislators of California are now debating an online gambling law with “bad actor” provisions–to keep PokerStars out.

Amaya Gaming to Expedite PokerStars US iGaming

Amaya Gaming has stated it hopes to “expedite the entry of PokerStars and Full Tilt Poker into regulated markets in which Amaya already holds a footprint, particularly the USA.

“Significantly Changed Circumstances”

The first place Amaya Gaming could have an impact is New Jersey. When it suspended the license application for PokerStars, the New Jersey Division of Gaming Enforcement said it was suspending the license process until PokerStars got its affairs in order.

A long statement was released at the time by Jersey officials, suggesting exactly how the world’s largest poker site could end their exile. New Jersey regulators said, “The DGE has determined that the application PokerStars casino service industry licensure will be held in a suspended status for a period of two years. New Jersey’s Division of Gaming Enforcement, within that period, may consider a request for relief to reactivate the application if significantly changed circumstances are demonstrated at which time the Division’s investigation of PokerStars and its affiliated entities and associated individuals will be resumed to assess suitability.

Further statements by the DGE indicated that the executives at PokerStars who had ongoing troubles with U.S. authorities could leave the company, and this might cause a change in the license status of PokerStars.

Amaya Gaming Changes the Equation

New ownership is a major change. Details of the purchase included a mention that the Mark Scheinberg would resign from all duties when the sale was complete. The sale is expected to be final on September 30.

Thus, the head of Oldford Group, Rational Group, and PokerStars will no longer be involved in the company’s business. As soon as September 30, the New Jersey Division of Gaming might be ready to end the 2 year suspension and give PokerStars the green light in establishing a legal online casino and poker room.

Impact on New Jersey Online Gaming

Such a decision would send shockwaves through the New Jersey online gambling industry. PokerStars has the most highly regarded software and tournament system for online poker. It is the most famous name in the industry. It has a huge player database. Within a short period of time, Resorts Casino could be the number one online gambling operation in the New Jersey market.

Borgata Online is now the leader of the pack. WSOP.com and Tropicana provide competition at the moment, but all these gaming companies have to be concerned about the impact PokerStars could have on their business. On the other hand, the state of New Jersey could find they have a much better revenue maker than they have since the rollout in November 2013.

David Baazov, Amaya Chairman and Chief Executive Officer, put the case succinctly in an interview yesterday. Baazov said, “Having this brand and this company in the U.S. is going to be very significant for states.

About Cliff Spiller

Steve came to his interest in poker later in life than some; a freelance writer who primarily covers the financial industry, Steve was drawn to online poker by the striking similarities shared between the markets and the games played at poker sites. Steve heads up content areas related to banking, security and currency as they relate to playing poker online.

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