Ex-Amaya CEO Off the Hook in Insider Trading Trial in Canada

A judge has decided to end the insider trading trial against David Baazov, the former CEO of the online gambling giant Amaya.

The charges came after a lengthy investigation by the gambling regulatory agency in the Canadian province of Quebec regarding the company’s $5 billion purchase of PokerStars. This purchase made Amaya the largest online gaming company in the world.

The Scandal

At the time of the purchase of PokerStars, which was in 2014, Amaya was a company that was moving up in the industry. Founded in 2004, the company focused on online gaming, especially table games, such as bingo and mahjong. Gradually, the company began to expand into other games and other markets. Amaya introduced online betting for horse racing. It began operating in multiple markets in Africa and the Caribbean. After amassing tens of millions of dollars in profits, Amaya began buying struggling online companies, such as Chartwell Technologies and CryptoLogic. A 2012 purchase of an online company, Cadillac Jack, expanded Amaya’s reach into Europe and North America. The company rapidly grew to hundreds of millions of dollars in revenue yearly.

The problems for Amaya began when the company began to work on the purchase of PokerStars, which belonged to an Israeli family. The family was requesting a cash sale for the rights to the huge online poker platform, and, at the time, Amaya did not have enough cash to meet the offer. It was during this time the Quebec provincial government stated Amaya engaged in illegal insider trading, using source tips to buy and sell stock to raise the capital it needed for the purchase. After the purchase was successful, the Canadian government began to question how it happened.

The Trial

Baazov, two other defendants, and three other companies pleaded not guilty to insider trading, which totaled five counts in all. These charges included attempted influencing of the market price for stocks and directly influencing the price of the stock market. The rise in the price of stocks held by Amaya and other related companies were seen to be an attempt to raise money to purchase PokerStars. Baazov had chosen to declare himself not guilty to five charges, including influencing or attempting to influence the market price of Amaya’s securities.

After about six weeks, however, a judge in Quebec ruled to stay the proceedings against all the defendants because of a procedural error on the part of the prosecution. The defense stated it received 320,000 documents that were privileged and that it should never have seen. The documents represent a small part of the evidence, which numbers in the tens of millions of pieces of information.

The defense has attempted to have the proceedings thrown out two other times during the course of the trial. The defense once claimed that the prosecution was not turning over evidence in a timely manner, which the judge rejected. Second, the judge rejected a defense motion that the amount of time from charges to trial was too long.

Amaya no longer operates under that name as a gambling company. It changed its name to The Stars Group and moved its headquarters from Montreal to Toronto. The Stars Group has continued to expand its hold on online gaming services in countries all over the world. The group has acquired Sky Betting and Gaming, as well as CrownBet, which gives the company additional entry into both Australia and the United Kingdom. The  Stars Group seems to be continuing on the road to prominence, despite the whiff of scandal less than five years ago.

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Richard Holmes was born in Tampa, Florida and studied computer science at Pensacola Christian College in Pensacola Florida. A devout Baptist, volunteer Sunday School teacher and online gaming fan, Richard works as a part-time systems administrator at Baptist Hospital and part-time professional blogger specializing in statistics, probability and computer science issues. He is an ardent believer in the future of artificial intelligence as a tool for transforming human society for the better, particularly in the area of health care and modern medicine. A chess player, and competitive online gamer Richard actively participates on online gaming tournaments in his free time.