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Amaya Gaming was the darling of the gaming world in 2014.

The little-known Canadian B2B gaming company became an overnight sensation when it purchased PokerStars and all of its assets this past summer, a remarkable $45 billion deal orchestrated by company CEO David Baazov.

In the lead up to the sale, and in the aftermath, Amaya stock was a hot commodity – volcano/supernova/surface of the sun hot – as the price went from $7 to $35. And when a stock sees that type of increase in just a few short months itusually draws the watchful eyes of regulators, which is precisely what happened to Amaya Gaming and the companies that helped finance the sale.

Amaya saw its stock price tumble following the investigation by Quebec security regulators, who intimated they were investigating potential trading shenanigans that may have taken place during the lead up to the sale of PokerStars to Amaya Gaming.

While worrisome on the surface, I have been informed this is standard operating procedure in a deal of this magnitude, and like an IRS audit, it may be painful to undergo, but as long as you have nothing to hide there won’t be any problems.

Word of the investigation (which was initially termed a “raid” but later reclassified as an investigation) sent Amaya’s stock reeling. The stock had increased over 250% since May of 2014, but suddenly nosedived, dropping from nearly $35/share to under $30 overnight when the investigation came to light on December 11, 2014 – or in the case of trading markets, when the market opened at 9 AM the following day.

One positive sign for Amaya was that trading was never halted in the days after the investigation was announced despite the highly fluctuating selling price of the company’s stock.

Now, a month later, the stock has finally rebounded, steadily gaining ground over the past two weeks and nearing its previous $35/share price – On Thursday evening the stock closed at 33.75.

The reason for the rebound is twofold.

Firstly, Amaya’s role in the investigation has petered out, and second, was the announced stock buyback program by Amaya and the sale of some of the company’s B2B assets such as Cadillac Jack in a recent statement issued by the company.

With the proposed sale of Cadillac Jack, the company seems to be moving more towards focusing on their B2C operation thanks to their acquisition of PokerStars, as they have already shed the OnGame Network, which became redundant following the acquisition of PokerStars. Amaya sold OnGame to NYX Gaming Group.

According to the Amaya Gaming press release, the company will be purchasing and cancelling nearly 5.4 million common shares, a number that represents 5% of the shares they floated to fund the purchase of PokerStars. “… purchasing shares for cancellation will increase the proportionate interest of, and be advantageous to, all remaining shareholders,” the press release notes.

The investigation shouldn’t be a surprise

When word of the investigation first came to light, the story was originally reported by Nathan Vardi of Forbes. Amaya Gaming issued a statement to Forbes pronouncing there was no wrongdoing on their end and they were cooperating fully with the investigation:

“Amaya is cooperating in an investigation by the Autorité des Marchés financiers (AMF), the securities regulatory authority in the Province of Quebec. It is not appropriate for us to provide any further details at this time.”

As rumors and speculation grew, Amaya later expounded on the initial statement hoping to quell these mounting concerns regarding the investigation:

“To provide clarification on a media report, Amaya Inc. (the “Corporation”) (TSX: AYA) confirmed that the Corporation and its officers are cooperating with the Autorité des marchés financiers, the securities regulatory authority in the Province of Quebec (the “AMF”), in an investigation with regards to trading activities in Amaya securities surrounding the Corporation’s acquisition of Oldford Group in 2014.

“To the Corporation’s knowledge, this does not involve any allegations of wrongdoing by the Corporation. Amaya will continue to cooperate, if and as requested, consistent with our practice to always cooperate with regulatory authorities.

“The Corporation will continue to monitor the investigation if and as it proceeds. The investigation has had no impact on Amaya’s business operations, employees or companies.”

More recently Amaya Gaming CEO David Baazov has stated they “anticipated” the investigation, whichisn’t all that surprising considering the financials involved (Amaya’s purchase of Oldford Group was one of the largest reverse acquisitions in history) and the heavy trading of Amaya stock before anything was officially announced, which resulted in the company issuing a general statement on possible acquisitions.

New California iPoker bill may send the stock even higher

Amaya’s stock may continue its upward climb following the introduction of a new online poker in California byAssemblyman Reginald Jones-Sawyer.

The Jones-Sawyer bill is lacking the stringent Bad Actor language that has divided the California tribal community, pitting a pro-PokerStars faction led by the Morongo Band of Mission Indians against an anti-PokerStars faction spearheaded by the Pala and Pechanga tribes.

If the bill gains traction it will be a very positive development for Amaya Gaming.

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Steve Ruddock

Steve is veteran of the the poker industry, first as a player and now as a writer focusing mainly on the regulated U.S. markets and the politics of poker. Follow Steve on Twitter @SteveRuddock and at Google+.