|Deal designed to
draw line under group's contentious past in America and is backed by private
equity group Blackstone
Isle of Man-based Scheinberg family behind the world's two biggest online poker
sites PokerStars and Full Tilt Poker are to sell the
controversial business they founded 14 years ago for $4.9bn (£2.9bn) in a
deal backed by private equity group Blackstone.
The sale is designed to
draw a line under the group's contentious past in America which has left past
senior executives, including Isai Scheinberg, charged in the US with bank
fraud, money laundering and illegal gambling offences.
The two poker sites were run by competing firms
until both had their respective operations in the US shut down in 2011, and a
criminal indictment was filed against top executives.
Full Tilt, then
based in Alderney in the Channel Islands, was quickly found to have a black
hole in its books and was only saved from imploding when it was bought by
PokerStars after the latter reached a settlement with the US Department of
Justice and pledged not to return to unlicensed online poker in America.
PokerStars agreed to forfeit $547m (£322m) to the US authorities
as part of the deal, which did not include an admission of wrong-doing. The
settlement also required PokerStars to bar Isai Scheinberg from any management
influence at the company.
combined group last year made most of its $1.1bn revenues from European
markets, among the largest of which is the UK. Poker player Victoria Coren
Mitchell, who in April became the only player to win PokerStar's European poker
tour twice, is affiliated to the company as a "Team PokerStars Pro".
The group is now keen to return to its many American players as US
states have begun to legalise online poker one by one.
So far only
Nevada and New Jersey have active licences and PokerStars has so far been
unsuccessful in licence applications, in part because of its past in the US.
Cutting ties with the Scheinbergs is seen as the key to winning support from US
The business is being bought by Amaya Gaming, a
relatively small casino and lottery software group listed on the Canadian stock
exchange. It is taking on huge borrowings to fund the deal from Blackstone,
Deutsche Bank, Barclays, Macquarie and others.
Amaya has agreed to
transfer its listing to a larger market within 15 months of its acquisition of
PokerStars. That could see it join the London stock market alongside competitor
Bwin. Party, which owns the PartyPoker brand another name that once
dominated the prize US online poker market, but exited after George Bush
introduced anti-online-gambling laws in 2006.
PokerStars already has
about 400 staff in the West End of London.
Sources close to the
Scheinberg family privately said Isai and his son Mark, who is chief executive,
live in the Isle of Man and have done for some time. While a banking source
said Mark is understood to travel regularly to the US, his father, who is among
those indicted, does not. Both sources declined to be named.
Department of Justice describe Isai Scheinberg as being "at large". A criminal
indictment, unsealed in 2011, describes him as being "founder, owner, and
principal decision-maker for PokerStars".
In the official sale press
release Amaya stress that PokerStar's current Isle of Man operating group was
founded and run by Mark Scheinberg, not his father. Mark Scheinberg said: "I am
incredibly proud of the business Isai and I have built over the last 14 years."