Winner: In the first of our six-part series documenting the year’s winners and losers, Amaya CEO David Baazov tells Gaming Intelligence the story of a remarkable year and sets the record straight on the future of Ongame
Amaya seemed to appear from nowhere in May 2011, when it swooped to acquire struggling software house Chartwell Technology. Since then it has rarely been out of the headlines whether it be acquiring more companies, posting double-digit revenue increases or launching emerging markets’ lotteries onto the internet.
Like almost everyone else, Amaya is in the process of positioning itself for a converged world of land, online and mobile gambling in regulated markets. The reason Amaya is a Winner is because it has made a lunge for the future in a manner that a small company from Quebec really has no right to.
That is in no way meant to belittle the company or Quebec. Canada’s entrepreneurs helped to launch the online gambling industry. In an increasingly mature market, it is a tribute to Amaya’s ambition that it has managed to emerge from nowhere and establish a brand that is probably bigger than the business itself. Acquisitions will do that for you. Acquisitions of the founding fathers of the founding fathers of an industry will increase your profile tenfold. Ask Lottomatica.
It embarked on a similar trail when acquiring the companies that made up GTECH G2 (now Spielo G2) and everyone there will tell you that integrating those companies is no easy task. But in acquiring Chartwell, CryptoLogic and Ongame, Amaya gave itself a brand awareness that is very, very difficult to build organically.
Amaya CEO David Baazov readily acknowledges that integration is no easy task, especially when the companies were on the verge of bankruptcy as was the case with Chartwell and CryptoLogic. However, he has faith in his integration team and points out that the companies have value beyond their brands.
“Whether it’s Chartwell or CryptoLogic, the companies we have targeted have significant intrinsic value and they sit well with the strategic vision,” explains Baazov.
Chartwell and CryptoLogic gave Amaya immediate market share in Europe but vitally they also gave Amaya the manpower and technology to accelerate the company’s speed to market. There was little point Amaya cutting deals in Kenya, Mauritius, Moldova and elsewhere if it couldn’t provide them with a full suite of products and provide them with it quickly.
The Ongame acquisition completes the gaming portfolio. Baazov had been interested in Ongame since way before Shuffle Master entered the picture but the timing was not right and the price was not right. When Shuffle Master withdrew, he was thrilled. He had seen Ongame’s product evolve and the price slumped. However, there is still the issue of bwin leaving the network. There is a popular theory that the network could collapse without the bwin traffic.
“Before we agreed to buy them we did significant analysis and the speculation regarding the impact of them leaving the network is way over-exaggerated,” states Baazov. “So that we’re clear, I wouldn’t even say it’s significant. The majority of bwin’s traffic is ring fenced already so its departure will have an insignificant impact on Ongame.
“We are already working hard to replace this traffic and grow the network. We are projecting no impact or minor impact on player liquidity and revenues. I think we will more than double the network in 2013.”
Amaya was launched in 2004 with a platform that initially supported electronic poker tables. People thought the company supplied electronic poker tables but the focus was always on the platform and building a platform that could support online, mobile and land-based technologies.
“Everything comes down to consumer acquisition, right” asks Baazov rhetorically. “The consumer acquisition of our customer (the operator) should be independent of the medium of delivery. The most important thing for them is to get the consumer and then cross-sell to them.
“Our business model is not driven from a purist gambling perspective, it’s about consumer acquisition. We are helping our operators to lower the cost of consumer acquisition by consolidating that for them.”
Amaya initially targeted emerging markets as they provided “greenfield opportunities”, according to Baazov. That meant less competition and no preconceived ideas as to what a gaming solution should be. As the company’s solutions have evolved and become more scalable, Amaya has shifted its focus to markets in North America and Europe.
In September, Amaya acquired Georgia-based manufacturer and operator of electronic gaming machines Cadillac Jack for $167m. The company focuses on serving small to medium-sized casinos and bingo halls, including Native American and commercial locations across the US and Mexico. Despite the profile of the other acquisitions in the online industry, this is Amaya’s biggest acquisition to date and it is key to the convergence strategy. Baazov hopes the combined platform will take the online businesses into the US and take Cadillac Jack into Europe and Canada.
“Europe and North America are now providing us with significant opportunities,” he says. “We are extraordinarily well-placed in the US. Regulation in the US represents a wonderful opportunity. In addition to Cadillac Jack, we have one of the most flexible B2B poker solutions and platforms. Whether you have state or federal regulations, they open us up to the largest tier one gambling jurisdiction in the world.”
In his annual report Baazov described 2011 as Amaya’s breakthrough year, 2012 was fairly extraordinary. And 2013?
“We expect a much better year in 2013,” states Baazov emphatically.
At the end of H1 2012, Amaya’s revenues were up 326 per cent. At the end of Q3 2012, they were up 360 per cent. 2013 is going to be something special.