A coalition between two California-based Indian bands, its three largest card clubs, and Amaya Gaming (TSX:AYA) increases the probability that Amaya’s PokerStars brand could eventually enter the state, says Clarus Securities analyst Eyal Ofir.
Yesterday, Amaya announced that The San Manuel Band of Mission Indians had agreed to join the existing business agreement between the Morongo Band of Mission Indians, California’s three largest card clubs, and Amaya Gaming.
The gaming operators say they will join together to operate a licensed on-line poker site in California, which is expected to legalize online poker in the near term.
“We are pleased to join this coalition,” said Lynn Valbuena, chairwoman of the San Manuel Band of Mission Indians. “We are convinced that the various interests must work together if we are to be successful in establishing a well-regulated environment and the best-in-class Internet poker industry for California.”
Ofir says the inclusion of San Manuel to the coalition is key because the organization, which operates the San Manuel Indian Bingo & Casino facility near Highland, California, because the band was one of twelve tribes that supported a draft online poker bill that opposed so called “bad actors” such as PokerStars, from setting up shop in California. A “bad actor” clause is a part of a bill that would prevent certain operators from being granted a license because of actions it might have taken when poker was prohibited by state and federal laws.
“In our opinion, the addition of San Manuel to Amaya’s coalition should significantly increase the probability of a more supportive tone for a PokerStars entry into the State as the combined lobbying effort should build momentum for a bill that excludes a bad actor clause.” says Ofir.
In a research update to clients this morning, Ofir maintained his BUY recommendation and $42.00 one-year target price on Amaya Gaming, implying a return of 28.4% at the time of publication.
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