PokerStars has withdrawn their real money online poker offering in Israel with immediate effecting citing a ‘commercial assessment’ as the reason, and parent company Amaya Gaming hold their AGM behind closed doors.
When PokerStars launched their online poker product in 2001, few people would have expected it to have grown into the 800 pound Gorilla that currently makes every other online poker site look like a bunch of monkeys.
One of those ‘few’ people would have been the founder Isai Scheinberg, and so it’s not without a sense of irony, that the man who was born in Israel will today hear the news that PokerStars will no longer offer real money online poker in his country of birth.
I guess it shouldn’t come as a complete shock – although that’s scant comfort for the professional grinders who have just heard they are out of a job. Many of whom will be in the World Series of Poker (WSOP), over 7,000 miles away from home, and with no way to withdraw their money from the site.
Israel is a ‘grey’ market for online gambling. Many experts will give you a professional description of what the term ‘grey’ means, but I’m not one of those writers. To me, ‘grey’ means trouble.
Gambling is mostly illegal in Israel, but there is legislation in place that allows Israeli citizens to bet on a National Lottery, run by Mifal Hapayis, and sports betting regulated by the Israeli Commission for Sports Gambling.
PokerStars has been able to offer an online poker product to Israeli citizens because online poker didn’t exist when the Israeli Penal Law 5737 outlawed most forms of gambling in 1977. I know it’s not a very solid argument, and one that PokerStars themselves seems to have realised is a little flimsy.
The largest online poker room in the world said they made their decision following a ‘commercial assessment’ of the market. The block was immediate. The free to play model is still in operation.
So what did that ‘commercial assessment’ reveal?
There are some that believe PokerStars are only interested in markets where there is a clear future of a single wallet offering the triumvirate of online poker, online casino, and online sports betting. If this is the case, Israel is not a market to be in with no talk of a change to that archaic 1977 gambling law in the offing.
The Israeli situation is farcical. State lottery regulators Mifal HaPayis manages to persuade Israelis to part with €1.2 billion per year, and there are approximately 200 companies based in Israel with ties to the gambling industry that generate over €893m in revenue for the company, not counting the high number of jobs the business creates locally.
And yet citizens of Israel can no longer play online poker wherever they want if that ‘wherever’ is PokerStars.
There is a slight glimmer of hope, and one that could be another reason PokerStars have withdrawn their real money offering from the country. There is the talk of an investigation into the possibility of building a few land based casinos in the resort city of Eilat. Perhaps, PokerStars want to keep their powder dry should the creation of B&M casinos lead to regulated online gambling. It could also be a move designed to appease those casting an interesting eye into their American endeavours with activity in grey markets sure to count against them as they try to become a major player in the Californian online gambling industry should a bill ever get into the hands of the governor.
David Baazov Makes an Appearance at a Closed Door Amaya AGM
Amaya Gaming Inc. decided to take the unusual step of holding their latest Annual General Meeting (AGM) behind closed doors. PokerStars owners barred the media and non-shareholders from the meeting held at a downtown hotel in Montreal on Tuesday.
Members of the press did gather at the venue and managed to get a few comments from the departing shareholders and people in power within Amaya.
When questioned about the closed door policy, VP of Corporate Communications, Eric Hollreiser, responded by saying, ‘we’re treating it the way we feel is appropriate for shareholders this year.”
Jason Ader of Spring Owl Asset Management told representatives of CanadianBusiness that the company was at a ‘crossroads’, had ‘great assets’, had plenty of ‘controversy’, and ‘lots of value.’ Adler also said the firm had its work cut out trying to persuade millions of online poker players also to partake in online casino games and online sports betting.
The upshot of the meeting was a few new bums on seats on the board of directors. Embattled former CEO David Baazov is not one of them. However, he was at the meeting, in his capacity as a shareholder.
It was the first AGM since Quebec’s Security Regulator hit Baazov with five charges connected to benefiting from insider trading. The 35-year old has 24.5 million Amaya shares (17% of all stock).
“I am just a shareholder of the company,” said the former King of Online Gambling.
Baazov is still in the process of trying to buy the company at $21 per share. Adler told the waiting press that several other potential buyers have entered into confidentiality agreements with the enterprise.
“It either needs to be a good price, a price that’s a material premium from where it’s trading today, or we’ll vote against it,” said Ader.