Amaya Offices Raided by Canadian Authorities

Posted on December 12th, 2014 by Alana Markoff
Amaya offices raided Canadian police

Canadian authorities and finance regulators raided the offices of Amaya Gaming as part of an investigation the company says it is cooperating with. (Image: Amaya logo)

Amaya Gaming saw its headquarters raided by Canadian police and provincial finance regulators on Wednesday as part of an investigation that appears to deal with securities trading related to the company’s purchase of the Rational Group earlier this year.

At this time, there are no accusations being made against Amaya itself.

As first reported for Forbes by Nathan Vardi, members of the Royal Canadian Mounted Police and the Autorite des Marches Financiers (Quebec’s financial market regulator, also known as AMF) made an appearance at the Montreal offices of Amaya while also visiting investment bank Canaccord Genuity and insurance firm Manulife Financial.

According to a statement from Amaya, they have no reason to believe that their corporate operations were a subject of the inquiry.

Amaya Says They Are Cooperating with Authorities

“[Amaya] and its officers are cooperating with [the AMF] in an investigation with regards to trading activities in Amaya securities surrounding the Corporation’s acquisition of Oldford Group in 2014,” Amaya wrote in a statement. “To the Corporation’s knowledge, this does not involve any allegations of wrongdoing by the Corporation. Amaya will continue to cooperate, if and as requested, consistent with our practice to always cooperate with regulatory authorities.”

The nature of the investigation and the exact areas of interest from authorities are unclear at this time. However, there has been some speculation that the performance of Amaya’s stock in the days before the acquisition of PokerStars and the Rational Group.

The company’s stock price nearly doubled in less than a month before the purchase, accelerating as speculation began to mount that a purchase might be forthcoming. That could be the kind of irregular activity that would trigger an investigation, even if no wrongdoing actually occurred.

It appears unlikely that the investigation has anything to do with poker or online gambling, given the agencies involved in the raid. Through spokespersons, both Cannaccord and Manulife have said that they are cooperating with the investigation.

Meanwhile, the AMF has been relatively tight-lipped about the scope of their inquiry.

“Yesterday’s operation is part of an AMF investigation on that company,” said AMF Sylvain Theberge, a spokesperson for AMF. “I can’t go further for the moment.”

With no charges filed or accusations made, the immediate impact of the action by authorities has been financial.

The Amaya Gaming Group is publically traded on the Toronto Stock Exchange, and as of early afternoon Friday, the stock was trading at CAD$28.83 per share, down from CAD$35.06 at the end of trading on Thursday afternoon, a drop of over 17 percent.

However, the news arising from this investigation could potentially place a road block in Amaya’s efforts to get the PokerStars brand back in New Jersey.

Given that authorities aren’t looking into the gambling operations of Amaya, it’s unlikely that anything specific that comes up as a result of the raid will give regulators pause when it comes to allowing PokerStars to offer games in the state.

On the other hand, the bad press from such a raid will give opponents more ammunition with which to attack Amaya when the company tries to enter regulated markets.

Amaya purchased the Oldford Group, which included the parent company of PokerStars and Full Tilt Poker, for the price of $4.9 billion this summer. That deal made Amaya the world’s largest publically-traded online gambling company in the world.

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