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Thursday, 13 December, 2018

The Stars Group diversifying from winning poker hand into sportsbooks

Rafi Ashkenazi: chief executive officer of The Stars Group
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The Stars Group may not have been a familiar a name before its seismic move with the purchase of Sky Bet Gaming for £3.4 billion over the weekend.

But, while it is a relatively new name in the gaming market, it has a long history of business dealings in the sector under its former title.

The Stars Group became the new name of Amaya only last year after that former company’s founder and chief operating officer David Baazov stood down to fight charges of insider trading and market manipulation in the company.

Amaya was rarely out of the gaming news, most notably for buying the Rational Group with its top brands of Pokerstars and FullTilt Poker for $4.9bn in 2014.

Those two poker brands have had a high profile in their space, but under the new leadership The Stars Group has turned to sporting superstars to promote poker with a Facebook campaign, including Neymar and Cristiano Ronaldo, Usain Bolt and Rafael Nadal.

Cristiano Ronaldo: signed up to promote The Stars Group's Pokerstars poker business

Despite becoming debt-laden with the Rational purchase, Amaya produced impressive returns sufficient that in 2016 it was able to bid for William Hill, with its prize of another high-profile poker site as well as a sportsbook, without having to add to its debt.

That bid failed and there has been a change of tack, with sportsbooks increasingly becoming an aim for new CEO Rafi Ashkenazi, 43, formerly a senior executive at Playtech, suppliers of online gaming and sports betting software.

After the name change from Amaya to better align with its mainstay PokerStars brand, and a management reshuffle, Ashkenazi started looking for ways to expand the company.

In a recent interview with Reuters, he claimed the company could raise up to $2.5 billion (£1.91bn) to fund acquisitions. The article claimed The Stars Group had about $255 million of cash and had reduced its debt by $515 million in the last year, giving it enough leverage to begin the search for new buys.

Rafa Nadal: another sporting superstar promoting The Stars Group's poker interests

The group is traded on Toronto’s stock exchange and has its annual meeting on May 10. Its Isle of Man-based subsidiary is working on the sportsbook side with the Group’s own emerging sportsbook, BetStars, that is primarily focused on regulated jurisdictions within the European Union. The Stars Group has also acquired a majority equity interest in CrownBet, which operates in the regulated Australian online sports betting market.

The group owns gaming businesses and brands that, it says, “together have more than 111 million registered customers globally and collectively form the largest poker business in the world”.

One city analyst said: “In the space of two months The Stars Group has doubled its size, transformed its product mix, materially mitigated regulatory risk and substantially improved its operational capability.

“While most sector mergers and acquisitions has been defensive and/or driven by the weakness of at least one party, in our view, we see this combination as potentially creating a genuinely global (ex Asia) sector powerhouse.”

That is clearly the view of Sky Bet chief Richard Flint, who said: “We’re delighted to join forces with The Stars Group. This allows us to offer our best-in-class products to a truly global audience. We’re excited about our future together.”

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