Amaya Gaming Group recently purchased the parent company of Full Tilt Poker and PokerStars. The parent company of PokerStars is Rational Group Ltd. Rational Group also owns FullTilt. The sale of Rational Group to Amaya makes Amaya the largest poker company in the world. Rational Group was sold for $4.9 billion dollars. Amaya is a publicly traded company and located in Canada.
The Money Behind the Sale
Many people have known for a long time that PokerStars was an incredibly profitable company. It is the most dominant poker site in the world. They routinely have thousands of cash games running. There are also hundreds of tournaments and sit-n-go’s running each hour. Rake is collected from all of these tables. Unlike a regular brick and mortar casino that has limited space, online rooms such as PokerStars have the potential for an unlimited amount of tables. This means an unlimited amount of rake.
Full Tilt was generating an enormous amount of revenue every month. However, unlike PokerStars, the original company was mismanaged. The shareholders, most of them poker players and not businessmen, did not segregate funds and this led to the crash of Full Tilt post Black Friday. Many of the shareholders in Full Tilt were receiving two hundred thousand dollars a month in dividends. Even though it was a mismanaged company, it did generate an incredible amount of money. While PokerStars is a larger site, many people preferred the Full Tilt software. This was one reason that PokerStars decided to purchase Full Tilt.
After Black Friday, many players were stuck with money on Full Tilt. PokerStars was able to pay American players almost immediately. Full Tilt, though, could not. There were many excuses, but the main problem was that the people in charge mishandled the finances. Howard Lederer and Ray Bitar were both criticized for not segregating player funds from operating funds. There was also the problem of letting Team Full Tilt Pro’s borrow money. This led to a massive collapse of the company.
PokerStars ended up buying Full Tilt and they paid back all of the players who had money stuck. The combination of the PokerStars and Full Tilt sites created the most powerful poker site in existence. There was only one problem. Neither site was operating in the United States.
Consequences of Black Friday
Black Friday was the day that the Federal Government shut down the domains for PokerStars and Full Tilt poker. The immediate result of this was that layers in the United States were unable to get their money or continue to play. Bank transfers were immediately suspended. PokerStars made a deal with the Government and was soon able to transfer player balances. It took much longer for Full Tilt players.
The major consequence of Black Friday was that PokerStars was no longer allowed to operate in the United States. This made it virtually impossible for most casual players to play. The sites that continued to operate were small and some were not trustworthy. A perfect example of this is Lock Poker. They simply stopped paying out players.
The man who owned PokerStars, Isai Scheinberg, agreed to pay a fine to the U.S. government. The people behind Full Tilt did not get off as easy. Ray Bitar was eventually sentenced to jail. There was testimony from Daniel Tzvetkoff that was used in the case. Tzvetkoff was involved in running payment processors for Full Tilt. Full Tilt owners also purchased a bank in Nevada to facilitate check processing. These were all serious offensives. Bitar was unable to negotiate a payment in order to avoid jail time.
What Does this Mean For United States Players?
The sale has led to speculation about the future of online poker in the United States as well as the inclusion of non-poker casino games and sports betting. Many industry commentators believe that PokerStars will be available in certain U.S. states by the end of the year.
United States poker players were stuck without any safe way to play online poker immediately following Black Friday. The sites that remained operational were very small and had little traffic. There was also the risk of the sites not paying out funds. This was the case with several online poker sites that remained in the U.S. market.
Many professional poker players from the United States ended up moving to Canada or Mexico in order to resume playing online poker on PokerStars. This was difficult, but it was the only option many felt they had. This was not an option for recreational players.
Within the last year, though, many states have passed legislation that makes online poker legal in their state. Nevada was the first state to pass a law legalizing online poker. Major sites immediately opened up. WSOP was one such company.
New Jersey was the next state. This was an important state. Everyone assumed that Nevada would introduce online poker because of Las Vegas. New Jersey was much more interesting. Yes, this is the state where Atlantic City is located. However, unlike Nevada, New Jersey has a huge population. There is a huge recreational base of players in New Jersey that does not exist in Nevada.
Party Poker, one of the largest online poker sites, soon entered the New Jersey market. This was an important event. Party Poker was the most popular poker site before the UIEGA passed. The UIEGA made it illegal for companies to operate online poker sites in the United States. Party Poker left the United States market. PokerStars did not. This let PokerStars grab the American market and in turn let them become the most dominant poker site in the world.
Because Party Poker complied with UIEGA, they were allowed to return to the U.S. market once individual states legalized online poker. New Jersey granted Party Poker a license to operate. PokerStars, however, could not return.
The sale of PokerStars to Amaya group opens up the U.S. market. It is expected that they will partner with an Atlantic City casino and offer online poker by the end of the year. Amaya was not involved with breaking the law in regards to UIEGA, so they will have no trouble getting a licensee.
More Than Poker?
It is speculated that Amaya will introduce games beyond poker. Full Tilt is already offering other casino games. There has been no official word about the introduction of casino games to PokerStars, but many believe that they will introduce both.
Online poker sites in New Jersey already offer roulette, slots, and other games. So it is expected that PokerStars and Amaya will follow suit.
Public Company and Regulated Poker
The sale of PokerStars to Amaya will also create more trust. The average recreational poker player puts more trust into large corporations. They don’t expect a company like Caesars or MGM to cheat them. Both of those companies are publicly traded and there is oversight and accounting. PokerStars was a private company. Even though it operated without scandal the fact that it is now public and subject to intensive scrutiny will make it more appealing to recreational players.
Players can expect the same quality service that PokerStars has always provide with the added benefit increased financial scrutiny. Amaya is now set to enter the U.S. market. They will bring Full Tilt and PokerStars to Nevada and New Jersey. Once other states such as California and New York join, the player base will grow to levels that existed pre-UIEGA.