Amaya Gaming to Purchase PokerStars for $4.9 Billion
PokerStars is arguably the most well-known online poker room in the world, and now the captivating story of this poker operator may be reaching a crescendo. Amaya Gaming, a small Canadian gaming equipment supplier, has forged a deal with PokerStars to buy the online poker room for $4.9 billion.
GSO Capital Partners, the credit division of Blackstone is backing this deal and it will purchase over $675 million in securities and convertible preferred shares. In addition, Macquarie, Barclays and Deutsche Bank are contributing $2.9 billion in credit facilities and other types of financing. This deal will be the end of an amazing story that started with Isai Scheinberg, a former computer programmer for IBM. He created the PYR software that led to the formation of PokerStars.
The Amazing Story of PokerStars
Through innovation and hard work, Scheinberg was able to setup the largest online poker network in the world. In addition, Scheinberg’s son Mark also became involved in the business. PokerStars followed other major poker rooms like Full Tilt Poker and PartyGaming into the U.S. market. However, there was a problem with this as the U.S. Department of Justice stated that online poker was a violation of the Wire Act and other U.S. laws. Despite this, PokerStars continued to offer online poker in the U.S. and argued that lawyers assured them that they were not violating any law in the U.S.
PokerStars became the largest online poker room in the world after the Unlawful Internet Gambling Enforcement Act was signed by President George W. Bush. This effectively shut down PartyGaming. Subsequently, PokerStars and Full Tilt Poker were the leading online poker providers in the U.S. In 2011, federal prosecutors shut down all online poker in the U.S., sued PokerStars and indicted Scheinberg for operating an illegal gambling business. This caused Full Tilt Poker to collapse and PokerStars paid a $731 million settlement to the federal government.
The Future of PokerStars
With its major competitors gone, PokerStars became the number one online poker room in the world and last year posted revenues of $1.1 billion. However, it has been difficult for the company to re-enter the U.S. market. The New Jersey Division of Gaming Enforcement stopped the review of this company’s application for an online gaming license because the company is still associated with Scheinberg who has yet to appear for the charges brought against him. Additionally, some lawmakers in California want to prevent companies that illegally operated in the U.S. from getting gaming licenses. As a result, the Scheinberg family has decided to sell PokerStars and will no longer have any association with the company after the deal is closed.