David Baazov has always fancied himself as a bit of a gambler. He has spent the past few years slowly building up his electronics company to a point where he can have a vital say in the future of the online gambling industry. Recent weeks have revealed that his company has completed an incredible $5 billion takeover of the online betting company PokerStars (which also owns Full Tilt Poker).
A quick look at the balance sheet for Baazov’s company shows that they do not have the cash on hand to complete such a deal. It means that a great deal of debt has been bought in recent months, secured against his existing and newly purchased companies, to help this deal go through. Experts believe that this is a wise gamble, with most expecting that online gambling will be legalized throughout the United States, but it is a gamble nonetheless.
There are still plenty of obstacles that must be passed before PokerStars can become a major player in the United States. Lobbying continues from influential sources to stop the legalization of gambling in the United States, with only a few states having allowed betting companies to set up sites to date.
The two sites he has bought up already have about 85 million users, but Baazov plans to greatly increase these numbers in the coming years. Not only will legalization of gambling be important, but he must incorporate these existing sites with other online powerhouses. Adding online games, smartphone applications, and other strategic partnerships will be the best way to make this happen.
Baazov had this to say on the matter: “We have no doubts that our newly acquired companies will reach out to new customers in the coming months and years. The goal is expansion in any way possible. That may include a broadening of the poker base, along with adding other games and features when the time is right.”
Legal Implications –
The truth is that no matter how brilliantly Baazov sets up these companies in the coming years, he is relying on the U.S. government to legalize gambling. If gambling is not legal in the majority of U.S. states within the next five to ten years, his acquisition of these companies will be a bust.
For now, PokerStars is back on the U.S. stock exchange, for the first time since 2011. However, the road to redemption for that company and for Baazov could be a long and ultimately fruitless one.
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