The owner of PokerStars, the world's largest online poker site, has agreed to sell itself to a small Canadian gambling-equipment AMAYA Gaming Inc of Montreal maker for $4.9 billion in a bid to re-enter the U.S. after being forced out by the Justice Department several years ago.
Shareholders of PokerStars' parent will sell their holdings to a unit of Toronto-listed Amaya Gaming Group Inc., according to a joint statement from the companies. Principals of PokerStars' parent company, such as Chief Executive Mark Scheinberg, will also resign from their positions with the company. Oldford Group Ltd. is the parent company of Rational Group Ltd., which owns and operates PokerStars and other brands such as Full Tilt Poker.
"Amaya believes the transaction will expedite the entry of PokerStars and Full Tilt Poker into regulated markets in which Amaya already holds a footprint, particularly the U.S.," the statement said.
In 2011, the U.S. Justice Department, which for years maintained states couldn't legalize online gambling, cracked down on the booming online poker industry that had developed in the country by filing civil lawsuits against PokerStars and other poker sites. The Justice Department indicted executives from poker sites, including Mr. Scheinberg's father, Isai Scheinberg, who is the founder of PokerStars, on criminal allegations such as bank fraud, money laundering and illegal gambling operations. Isai Scheinberg, who hasn't been arrested, remains out of the country. The Isle of Man-based company and its founder deny wrongdoing.
But shortly after the crackdown on the industry, the Justice Department in another twist ruled that states were free to legalize online gambling.
In an effort to return to the U.S., where its operations have been blocked, PokerStars in 2012 agreed to pay $731 million to settle its civil suit with the Justice Department and to buy a rival site. Isai Scheinberg's son, Mark, became the chief executive, while Isai Scheinberg was prevented in the settlement from having a direct management role.
But so far the settlement and PokerStars' heavy lobbying efforts have been for naught with the company still unable to operate in Nevada, Delaware and New Jersey—the three states that have since started allowing people physically in their states to engage in some forms of online gambling.
In December, New Jersey gambling regulators, citing the company's legal woes, said that PokerStars wouldn't receive a license to operate online poker in the state for at least two years. New Jersey's Division of Gaming Enforcement said it would reconsider the application if the company demonstrated "significantly changed circumstances." Industry observers said those likely would involve resolving the federal indictment against Isai Scheinberg or limiting his family's association with the company.