The internet gambling world, while only in existence for the last 25 years, has seen its fair share of companies and personalities come to prominence.
In many cases, there is a slow burn to a company’s growth, and in others, a leader shines bright like a comet in the sky.
This is the case of David Baazov, who seemed to come out of nowhere to become one of the industry’s most notable figures, and get himself into a bucket of hot water – all by the age of 35.
The Early Years
David Baazov was born in Israel in 1980. His parents, both of Georgian descent, decided to move their family to Montreal only a year later. There, they found a tight-knit community of Orthodox Jews who became an extended family to them and their family of six children.
As you can imagine, the rules in the Orthodox Jewish community were copious, and trying to adhere to those standards in a large household in a modern city like Montreal allowed for some to fall through the cracks.
Baazov was one of those kids. A brilliant math student, Baazov quickly grew bored with traditional school, and at the age of 16, he decided he had had enough. He came home from school one day and announced to his parents that he was going to drop out of school.
Not shockingly, his ultra-conservative parents were outraged, and they kicked him out of their house.
For a period of two weeks at the age of 16, Baazov found himself homeless, sleeping on the benches of Montreal’s various parks.
The Entrepreneur Takes Roots
While on the street, he started to think about what he could do to make money. Not long after being out on the cold Montreal streets, he managed to rent an apartment (with some help from his older brother’s ID) and then the hustle began in earnest.
He started to earn money by going to dry cleaners and other stores to get them to be a part of a coupon book he was planning to sell to people through the mail. While it took him a while to get his business acumen sorted, he did manage to get this enterprise off the ground, which helped create some working capital. But Baazov wanted more, and he wanted it quickly.
Sensing that there was a hole in the market, Baazov started a computer reselling business next, hoping to land some contracts to become the chosen provider for a booming computer hardware market. This was a tough market to enter, and business wasn’t great until Baazov caught a huge break.
He managed to land a deal to sell computers to the Montreal Public Library, which not only provided some much-needed revenue but also gave him a name in the industry. He quickly grew the hardware business to a 20 million-dollar venture.
However, as hardware companies realized they could save money by just selling computers directly to consumers, companies like Baazov’s were in jeopardy.
Pivoting once again, he sold the hardware business and decided to focus on software.
A Gaming Empire Begins
In 2005, Baazov founded what would become Amaya software. He started working with some gambling experts to develop software that could be embedded into a poker table; the theory being that a casino could buy this table and have it in their facility without a dealer necessary. This would allow the hands to play much faster, almost as fast as their online counterpart.
In turn, this would make the casino more money in rake and Baazov more money in commission. The tables, while not a huge hit initially, did start to generate some income for Amaya, and with that income in place, Baazov decided to raise some capital by taking Amaya public on the Toronto Venture Exchange.
With revenue of about $6 million in 2010, Amaya raised approximately $5 million in its initial offering.
At that time in the gaming industry, a major change was about to take place. Many of the early entrants in the market were being passed by more aggressive players on both the operator and vendor sides of the business, and by October 2006 with the introduction of the Unlawful Internet Gambling Enforcement Act in the U.S., the landscape changed forever.
Baazov, sensing this, decided to use the money he had raised to enhance the profile of Amaya by getting into the acquisition market. First, he picked up some distressed Canadian gaming assets in Chartwell and Cryptologic Software, both once leaders in casino and bingo software but by 2010 they were nearing the end of their run.
This didn’t do much for revenue, but it told a great story to investors; the once penny stock was rising rapidly. In 2012 David parlayed that into the purchase of slot machine maker Cadillac Jack for $177 million, with much of that being raised in debt from Blackstone.
The Big Prize
These acquisitions made Amaya and Baazov very valuable, and they could have rested their laurels there with a nice revenue stream from the slots games. However, that isn’t how Baazov operates, and he then decided to turn his attention to the biggest prize of all in the online gambling world – the hugely successful PokerStars.
Now, this seemed outlandish on many fronts; the poker site had just paid a massive fine to the Department of Justice to settle the issues stemming from operating post-UIGEA. Also, the company was doing incredibly well from a profitability standpoint, reaching the billion-dollar revenue mark. Finally, the owners of the private company, Isai and Mark Scheinberg, didn’t seem to have any interest in selling it.
Baazov didn’t appear to care, instead working both sides of the deal. The Scheinbergs were Canadians of Israeli descent, so Baazov used that connection to start conversations, trying to ascertain a selling price.
On the other side, he needed to figure out how to raise enough money to actually pay for the company; Amaya was only worth a fraction of PokerStars’ value. He had conversations with Blackstone, who laughed in his face, but that wasn’t a deterrent; he continued to work both sides.
The businessman still needed a little bit of luck to push the deal over the edge. Finally, he got that break when in 2013, PokerStars had their New Jersey gaming application denied due to the Scheinbergs’ continued relationship with the firm. That was the catalyst Baazov needed, and in early 2014 a deal was reached whereby Amaya would acquire PokerStars for a staggering 4.9 Billion dollars.
The King of Online Gambling… (for a short time)
With that stroke of his pen, David Baazov had gone from homeless and sleeping in the parks of Montreal to the most important man in online gambling… all by the age of 34. However, it was that risk-taking style that took Baazov on this wild ride to the top that would ultimately be his undoing.
To raise the capital, he needed to acquire PokerStars, Baazov had turned to convincing people to buy his shares at a very inflated price which isn’t unusual; it’s a speculative play that requires a leap of faith that the deal will go through.
However, in conducting such a large deal, Amaya ended up on the radar of securities regulators. In their investigation of the transactions, the regulators found some irregularities, finally charging Baazov and 12 others with insider trading.
While consistently denying these accusations, Baazov was removed from the Amaya board and replaced as CEO. Just as quickly as a river card can be dealt, Baazov’s real-life bad beat occurred… he was out.
Recently, Baazov has made efforts to purchase PokerStars from Amaya, but those attempts have failed to materialize. And now, one of the industry’s loudest and most brash personalities awaits trial in November 2017, after which we’ll all see if he is drawing dead or not.