Amaya’s $4.9bn acquisition of PokerStars parent Rational Group brings an end to the Scheinberg’s domination of online poker. Gaming Intelligence recalls how they did it.

Amaya Gaming chief executive officer David Baazov first approached Mark Scheinberg a year ago with a proposal to buy PokerStars. He was laughed out of the building.

Contrary to popular opinion, Mark and his father Isai had no desire to sell the company they founded in December 2001. Sure, the US situation was troubling, and a sale or even an initial public offering were possible solutions, but there was no great urgency. Insiders say the company was happy with the strategy it had laid out to get into California and New Jersey. There was no need to sell, and it was unimaginable that a small B2B outfit like Amaya could rustle up the funds to even make it tempting.

PokerStars is in rude financial health. The company reaped $1.133bn in revenues in 2013, up 16 per cent from the year before. Adjusted EBITDA was $420m. While the US attracts a lot of attention, PokerStars is a global business that is making a lot of money elsewhere. Of course, the company wants to be in the US, but it had not got to the stage where the potential of the US market demanded a radical change of policy.

So Baazov was sent packing. After all, he was the founder of a B2B gaming company that launched in 2004 and, by this stage in mid-2013, had revenues of just $72m, a mere seven per cent of PokerStars’ 2012 figure. It had made a habit of buying distressed assets on the cheap – Chartwell, Cryptologic and Ongame particularly – rather than market-leading billion-dollar enterprises.

However, Baazov was not living in cloud cuckoo land. “He has some people that really believe in him,” says a source close to the deal. Clarus Securities research analyst Eyal Ofir, who has been following Amaya for years, agrees. “He is very bold and is willing to take a chance. He has the wherewithal to come up with a plan and to execute it.”

Baazov returned six months later with evidence from his backers that he was serious. Deutsche Bank and long-time Amaya ally Canaccord Genuity are leading the financial institutions, but the return to the gaming sector of Barclays will have cheered chief executives that might otherwise have been feeling a bit down.

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