Industry Super-Affiliate PokerNews Disclosed as Majority-Owned by The Stars Group
Here’s one of those slightly sketchy tales from the underside of the online-gambling world that can now be told: PokerNews and its parent company, iBus Media, are in fact majority owned by The Stars Group, parent company of the world’s largest online-poker site, PokerSite.
The news was disclosed by to the public this week in a feature penned by PN writer Joss Wood, following a disclosure of the TSG ownership to all employees in a company-wide conference call. The reason for the disclosure, according to Wood’s feature, is that the company is planning to enter an acquisition and expansion stage and, as Wood put it, “felt it was the appropriate time to ensure there was clarity around the ownership of our business.”
Rumors about Stars’ ownership were widespread, to say the least. Despite this, and despite the fact that ownership of iBus Media and PokerNews probably should have been discovered and disclosed amid the securities investigations surrounding Amaya (that’s the former name of current owner The Stars Group) and its ousted president, David Baazov, that never occurred. Instead, PN employers and posters on social media have claimed to be shocked this week at news that iBus Media founder Tony G (Antanas Guoga) is no longer at PN’s ownership helm.
If Guoga is indeed gone from the online-poker and gambling business world, that’s actually a good thing for poker in and of itself. Just so it’s on the record, Guoga helped breathe new life into the insider-cheating-damaged Cereus Network sites Absolute Poker and UltimateBet (UB.com) by cutting a major advertising and banner deal in 2009 over significant editorial objections. Anyone who made first deposits on either site via PN between early 2009 and April of 2011 can thank the G for helping apply a new veneer of legitimacy to what were clearly corrupted sites.
Such squirrelly deals in the name of money were a hallmark of the G era, literally from PokerNews’ inception as a gambling-related site. Unfortunately, it now seems clear that something just as squirrelly occurred in the Amaya era. But to explain that one, we need to track the history of all this, as best as can be reassembled from the currently viewable pieces.
The acquisition of PokerNews by Stars appears to have happened way back in the Rational Group ownership days, most likely in 2011. I heard about in late 2015, from a reliable source, though even then it was still just hearsay. One place it did pop up was over at Todd Witteles’ PFA forum, and a thread on the topic drew a comment from Australian pro Gary Benson.
Benson, well known by his “OzGary” handle, posted the following in January of 2016:
“Tony G was at the Aussie Millions so I took the opportunity to ask him about this. He confirmed that he made the deal to sell PokerNews to the Rational Group (now Amaya) with Isai [Scheinberg] personally in the 2nd half of 2011 for $30m although the handover was done progressively over a period of time.”
I’ve checked around, and found no knowledgeable disagreement to the above. As the head of a closely held and private company, Scheinberg was under no obligation to disclose Rational’s partial acquisition of PN.
One also notes the timing of the deal — assuming the above is accurate — was not too long after 2011’s Black Friday. That US-based crackdown hurt affiliate sites such as PN as much as it hurt international operators as Stars, even though Stars was well-positioned to weather the storm, unlike most of its US-facing competitors.
I suspect that the deal was largely a “this too shall pass” moment regarding the US firestorm, and that Scheinberg thought he was purchasing a controlling interest in the industry’s largest poker news/propaganda site on the cheap. Again, though I’m not a lawyer, there was likely no disclosure requirement for either Rational or Scheinberg in connection with the deal. Most Western countries have similar disclosure laws in this regard.
It’s a bit like Sheldon Adelson purchasing the Las Vegas Review-Journal, though at least two relevant differences exist: Adelson way overpaid for the LVRJ, making it suspicious on its surface, and LVJR staffers cared enough about the deal to find out who really bought the paper. In contrast, PN people heard the rumors about Stars and stuck their fingers in their ears. In there somewhere is a pretty clear statement about the nature of poker “news”… at least as it occurs at PN.
However… that’s still not the largest problem with all this. In September of 2014, just four months after acquiring PokerStars and all the related Rational Group / Oldford Group assets (including, presumably, PokerNews), new Stars parent Amaya terminated the majority of its long-term affiliate deals. That killed off the promised lifetime-revenue streams from players that previous ownership had agreed to. It was “legal,” in terms of the affiliate contact legalese, but ethical? Maybe not so much.
Oh, and despite that affiliate head-chopping being a furor-causing story throughout the poker world, PN didn’t touch it. And that leads to what’s really the big problem here: The sale of all of Rational (Oldford) Group’s assets to Amaya created a situation where affiliate revenues generated by PokerNews were going into Amaya’s corporate coffers; Amaya’s direct competitors were thus pumping up Amaya’s revenue without having any idea about it. In the meantime, Amaya had damaged much of PN’s affiliate competition by terminating their own contracted relationships with those “outside” affiliates.
This all put PokerNews in a privileged, superior position with regard to generating affiliate revenue. Given that by this time Amaya was a publicly-owned entity, it’ll be curious to see if this stuff might entail any sort of antitrust violation. It also appears to have fallen right in line with the way Baazov and his friends ran the merger-and-acquisition-crazed Amaya, cutting themselves special deals.
In the securities world, that’s brought Baazov and others a trial in Quebec on insider-trading charges. The PN thing probably isn’t as serious a legal matter, if it’s indeed a “legal” matter at all, but it appears every bit as corrupt.
Now we all get to sit back and see what comes of it. It might be days, weeks or months, but this has the potential to turn into a major firestorm for both PokerNews and Amaya, and it almost certainly will have an effect on the way PN conducts its business moving forward. PN’s official Twitter feed has already stated that news stories connected in any way to PokerStars will now carry an ownership disclaimer. That’s good, even if it is several years too late.
(The opinions expressed here are solely those of the author and do not necessarily represent the views of the owners and publishers of FlushDraw.)