News Column

Fitch: PokerStars' US Re-Entry Via Amaya Buy Is A Game Changer

June 16, 2014



NEW YORK--(BUSINESS WIRE)-- Amaya Gaming Group Inc.'s acquisition of PokerStars could change the game among US online poker operators, according to Fitch Ratings. The return of the exiled poker giant would inhibit the online poker ambitions of big US based operators such as Caesars Entertainment, Boyd Gaming and Station Casinos. PokerStars, with its FullTilt unit acquired in 2012, commanded roughly 70% of the US market until authorities shut the sites down in 2011.

Amaya on Friday agreed to acquire PokerStars for $4.9 billion. PokerStars' disclosed revenues of $1.1 billion dwarf the poker revenues of its nearest publicly traded peers including bwin.party, which has about $150 million in annual poker revenues, and 888, with roughly $125 million.

Because PokerStars is well capitalized and has a large database, it would be a formidable competitor to operators attempting to gain a foothold in the fledgling US market. PokerStars could also stimulate demand and grow the overall market as states like Pennsylvania and California attempt to legalize online poker. PokerStars' database and brand recognition among poker players could lead to faster ramp-up in these newer markets and may reinvigorate markets where online poker is already legal, if these states reconsider PokerStars' application.

PokerStars operated in the US illegally after online gaming was banned in 2006 but exited the US in 2011. It paid a $547 million fine to the US Department of Justice for prior involvement. While online gaming began to roll out in 2013 on a state-by-state basis, PokerStars had significant difficulty getting licensed due to its resume of illegal operations prior to 2011. Under the Amaya acquisition agreement, PokerStars owners will cut ties to the company (although management will be kept in place), which may allow them to get licensed.

Delaware, New Jersey and Nevada all passed intrastate online gaming in 2013 but results thus far have been disappointing, with New Jersey showing sequential monthly declines in online poker. California is close to legalizing intrastate online poker with most Native American tribes supporting a bill with a "bad actor" clause that restricts companies that operated in US after 2006 from obtaining a license. The Morongo tribe, which has considerable political influence in the state, is withholding its support of this clause due to its affiliation with PokerStars.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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Fitch Ratings

Alex Bumazhny, +1 212-908-9179

Director

Corporates

or

Kellie Geressy-Nilsen, +1 212-908-9123

Senior Director

FitchWire

Fitch Ratings, Inc.

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Brian Bertsch, New York, +1 212-908-0549

brian.bertsch@fitchratings.com

Source: Fitch Ratings


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Source: Business Wire