Caesars Acquisition Company (CAC) held its quarterly earnings call recently, and one of the topics of discussion was the state of online poker in California; particularly the possibility that PokerStars might be allowed to participate with or without the inclusion of a bad actors clause in future legislative proposals. Amaya was commended for its recent acquisition of the Rational Group, parent company of PokerStars and Full Tilt, and the fact that the buyout could result in a much cleaner slate for the company in the eyes of US regulators.
Mitch Garber is the CEO and President of CAC and was a major contributor to the conversation during the 2Q14 earnings call. His view of the PokerStars acquisition was a positive one, although when asked to predict the future of the world’s largest online poker room in the US market, he chose not to prophesize the company’s potential.
“I think we’ll all agree that from a capital finance perspective,” said Garber, “it was a tremendous transaction. How it will impact US real money online gaming is really unclear to anyone.” He continued by estimating the view of PokerStars in the eyes of US regulators, which are still very new to the concept when compared to regulatory authorities in the European market.
“I think we’ve been very consistent in what we’ve said, which is that regulators have become very knowledgeable in a very short period of time about online gaming and licensing online gaming operators”, said Garber. “PokerStars, or now Amaya with the PokerStars asset, will go through that very stringent licensing process that we all do go through, and regulators and legislators will make decisions on their applications as they do on ours and any other parties.”
In essence, Garber did not give any indication of whether he thinks PokerStars will or won’t be deemed virtuous in the eyes of US online poker regulators. He simply stated that the brand will undergo the same scrutiny every other operator licensed in the US has already endured. He went on to say that PokerStars “has been a poker company to be reckoned with,” but that the brand’ impact, if any, on the US market should be left in the hands of regulators, not speculators.
Having penetrated the US market far longer than the UIGEA of 2006 legally permitted, it wasn’t until the ominous Black Friday of Online Poker in 2011 that PokerStars and Full Tilt were authoritatively forced from the US market. Rational Group’s previous owner, Isai Scheinberg, was one of the men named in the unsealed indictments, and although he quickly resigned from the CEO position, his son Mark took over, leaving the tainted Scheinberg name in control. Now that Amaya’s CEO, David Baazov, is in charge, Garber was willing to give his opinion on the once-tarnished reputation of Rational Group, but only from his own company’s frame of reference.
“We’re partners with Amaya pre the transaction because we use their software platform for our casino games under the Caesars brand in New Jersey,” said Garber, who asserted that the brand’s blemished reputation has certainly improved in the eyes of Caesars. “I know and I like their CEO [Baazov] personally, and I think we’re just going to monitor the situation and take the time to take positions as we need to take positions.”