Wednesday, February 3, 2016

Good news from New York for Amaya (AYA)

After a 50% drop I said Amaya Gaming was my top stock for 2016.  Unfortunately the entire market has continued lower and Amaya has dropped like most stocks.

However, two recent news items have put some upward impetus back into Amaya's stock price. The first news item was the announcement that Amaya's CEO has offered to buy the entire company for $21.00 per share Canadian dollars.

This is not terrific news for us because that only comes out to about $15.25 per share in US dollars. I paid about $16.30 but several analysts think that the bid will have to be increased in order to entice enough shareholders to sell.

The other news is that a bill legalizing online poker in the state of New York advanced out of committee on Tuesday.

“The PPA thanks Chairman John Bonacic and the Committee for acting quickly to pass iPoker legislation through the Senate Committee on Racing, Gaming and Wagering," PPA executive director John Pappas said. “If passed into law, the bill would provide New Yorkers who play poker online with a safe and regulated environment, while bringing in revenue for the state. We encourage the Finance Committee to move quickly to usher the legislation through the Senate.”

There is a companion bill in the New York Assembly that also would lead to regulated online poker. The PPA said it “also urge[s] the Assembly to move forward” with the bill.
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The New York online poker market could be worth more than $120 million in the first 12 months after launch, according to testimony at September’s hearing. Both proposals on the table are eyeing a tax rate of 15 percent on online poker operators, who would also have to pay $10 million for a 10-year license. Up to 10 licenses could be awarded.

The company has had some hiccups recently but it remains a cash generating machine and although it has a higher debt level than many would like to see I think it's leading market share advantage in online poker along with new initiatives in online casino's and sports book will lead to an upward re-valuation. 

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