Statement by Warwick Bartlett, Chief Executive, Global Betting & Gaming Consultants (GBGC):
This is a deal no one expected and the aftermath is likely to be felt for some time in the industry.
PokerStars has been a blockbuster company that has taken market leads in all the territories where it trades except France where it is number two. This is a highly efficient company.
Amaya is a relative minnow by comparison and in January 2014 they were unable to get into the GBGC index of the top 50 gambling companies by market capitalisation. They were then number 52. If the deal gets shareholder approval and goes through on September 30th they will be in the top 20, probably the fourteenth largest gambling company in the world.
Party Gaming plc when it listed on the London Stock Exchange in June 2005 made it into the FTSE 100 with a market cap higher than British Airways. Party merged with Bwin to make one of the largest gambling companies but today that market cap has almost halved to US$1.55bn. Big mergers do not always lead to great commercial successes.
Companies that top our index have drifted lower in the past. Whereas OPAP topped the chart in 2009, for example, they are now down to 15th place. International Game Technology was number two in 2008 and 2009; now they occupy the 20th slot.
The success of Amaya will now depend on three things. First is whether it can manage Poker Stars as well as the founders Mark and Isai Scheinberg. The father and son team were driven to make PokerStars the number one company, will that same drive now exist at Amaya and the PokerStars team?
If it does then there is further trouble in store for the present incumbents in the USA namely 888 and Bwin Party who are presently market leaders in New Jersey. Add PokerStars into the mix and you can see that market share will be lost by both in what has been a disappointing market so far.
The second big question concerns whether PokerStars under the Amaya umbrella will win licences in the USA. Much depends on them doing so to account for such a high purchase price. They will of course have to overcome bad actor clauses that most states are including in their forthcoming legislation. So it is not going to be easy, but nothing is in the new world of egaming.
Finally Amaya is a quoted company and PokerStars has historically traded in countries that the industry calls ‘grey’ markets. These are jurisdictions where there is no law allowing Internet gambling but no law forbidding it. Will Amaya close those markets down?
It isn’t going to be easy. For PokerStars the big win is access to the USA and this is possibly the only route. For every buyer there is a seller and the sellers in this case have been proven to be very astute in the past.