Amaya Gaming Stock in the Negatives after Insider Trading Charges Emerge

Over the past few days, Amaya Gaming has been hit with positives and negatives. In the positive, the company has seen PokerStars do well in the state of New Jersey. PokerStars NJ has been very successful and within just one week of launching fully, the brand has taken over the top spot in online poker traffic in the state. Amaya also was just given approval for six more months of operations via their gaming licensing within the state, after the New Jersey Division of Gaming Enforcement decided to approve the company.

But that is just the positives, the negatives have been rolling in as well. David Baazov, the Chief Executive Officer for the company, was recently named in insider trading charges by the Autorité des Marchés Financiers of Quebec. Several charges were filed against a number of individuals, including Baazov, who faces five charges involving insider trading. Baazov then announced he was taking a paid leave of absence from the company to focus on fighting the charges as well as potentially purchasing Amaya Gaming in the future.

Now, we have learned that Moody’s Investors Service have changed their outlook on Amaya Inc as well as Amaya B.V. and related assets to the negative. This change was completed in regards to the charges filed by the AMF, which is an organization of Canada which is similar to the Securities and Exchanges Commission of the United States. The AMF works to ensure that the different stock exchanges of the US are not subject to wrong doing.

Moody’s reasoning behind the negative outlook was made based on the perception of an increased credit risk for Amaya. Moody’s feels that the civil charges as well as the legal process that will follow could have a negative affect with the operations of the company as well as growth strategies. This should particularly be considered since Baazov significantly was involved in the development and execution of the business strategies of Amaya. The negative outlook is also taking into consideration the uncertainty considering how regulators will react to any disclosure made in regards to the inside trading charges.

Essentially, this is why Baazov made the decision to take a paid leave of absence. It is believed that there is a sliver of truth to the statements made by Baazov that he was preparing to defend himself in regards to the charges, but Amaya could also not have him at the forefront of the company due to the charges he faced and the impression it gives to companies such as Moody’s.

Additionally, Baazov mentions still purchasing Amaya Gaming, which was an idea put on the table a few weeks ago. This deal could still be on the table but one would assume that no purchase would be allowed by Amaya officials until Baazov is cleared of the charges.

The charges against Baazov and other individuals stem from the purchase of Full Tilt and PokerStars from the Rational Group by Amaya Gaming. The purchase took place back in 2014 and the stock of Amay seem to jump when rumors of the sale emerged. The stock jumped from $5.85 to $6.88 in stock prices within just a few weeks and continued to climb, hitting around $30 by the end of June.

For now, Amaya Gaming stands behind Baazov amidst the insider trader charges. Baazov is fighting the charges and more information is surely to be released on the charges in the coming days or weeks. It will be interesting to see if Amaya Gaming will be able to avoid any further damage to the company based on the charges at hand, including PokerStars operations in the state of New Jersey.