Outgoing CEO ‘proud’ of part he played at Amaya
Online gambling company founder says he will still support its strategy
After being appointed temporary CEO of Amaya Inc. in March, Rafi Ashkenazi said Friday that he will be taking the helm on a permanent basis, an announcement bolstered by a big jump in second-quarter profits for the online gambling company.
Amaya says David Baazov, who co-founded the company and grew it into a global gaming giant with the $4.9-billion PokerStars and Full Tilt acquisition, resigned all his positions with the company on Thursday.
Baazov temporarily stepped away from his role as CEO in March amid insider trading charges related to the PokerStars acquisition and after expressing his intention to buy out the company.
“I am proud of my contributions in building Amaya into the successful company it is today, and continue to be supportive of its strategy and management,” said Baazov in a statement Friday morning.
Baazov’s resignation came as the Pointe-Claire, Que.-based company reported revenues of US$285.9 million in the quarter, 10.2 per cent higher than the same period last year ended June 30.
Amaya’s casino and sportsbook revenues increased to US$60 million, supported by betting on the Euro 2016 soccer tournament in June.
However, Ashkenazi says poker revenues were flat in the quarter at US$216 million, partially as a result of people watching the soccer matches instead of playing online.
He says that although the Euro Cup created a new, higher baseline from a sports betting perspective, Amaya does expect to see negative effects reflected in July, even after the end of the tournament.
“It typically carries a hangover effect for several weeks after completion and requires adjustments to the promotional calendar,” said Ashkenazi on a call to investors Friday morning.
Amaya stock closed down 1.42 per cent Friday to $20.87.
On a geographic basis, Amaya says its revenues for the first half of 2016 were split 63 per cent from 28 countries in the European Union, 17 per cent from the rest of Europe, 13 per cent from the Americas and seven per cent from the rest of the world. Ashkenazi said he believes the U.S. will be the biggest growth opportunity.
The company faced some currency headwinds as having game play predominately in U.S. dollars meant a decline in purchasing power for many customers.
Ashkenazi estimates the value of customers’ local currencies dropped an average of 3.6 per cent against the U.S. dollar on a yearover-year basis.
Amaya’s adjusted earnings rose to US$89.7 million, or 46 cents per share, from US$72.1 million, or 36 cents per share, a year earlier.
The company says Divyesh Gadhia, who was named interim chairman of the board in March, will permanently take on the post.
Baazov co-founded Amaya in 2004 and in just a decade he transformed his online gaming company from a penny stock into an industry leader.
“David is a very, very smart person and a friend,” said Mitch Garber, the Montreal-based CEO of Caesars Interactive Entertainment.
In June 2014, Baazov closed the PokerStars deal to make Amaya the largest online poker room in the world.
Baazov is the company’s largest shareholder and in February 2016 announced his intention to lead a group of buyers in a plan to take Amaya private for about $2.8 billion.
However, in March Quebec’s Financial Securities Regulator laid charges against Baazov and a handful of others for insider trading and manipulating stock prices.
A week after Baazov was charged the company announced that he was taking an indefinite paid leave of absence.
“Even if the company is engaged in an ongoing a strategic process, it needs a clear leader to run the day-to-day operations,” spokesman Ian Robertson told The Canadian Press after the earnings were announced.
On Friday, Amaya said that it had entered into discussions with a number of parties about buying the company, and that some of these talks have progressed.
“While these discussions are advancing, there remains no guarantee that this process will result in a transaction of any kind,” said a company news release Friday.
Even if the company is engaged in an ongoing a strategic process, it needs a clear leader to run the day-to-day operations.