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We are still on the third week of the New Year, and already one of the biggest live poker brands has witnessed a change in ownership. In a surprise announcement on Tuesday, Allied Esports Entertainment confirmed selling its poker business and assets, including the globally renowned brand, World Poker Tour (WPT), to Element Partners LLC for approx. $78,250,000. The WPT broke the news in a press release while sharing a video announcement by WPT CEO Adam Pliska across its social media channels.
Allied Esports Entertainment Announces the Sale of World Poker Tour to Element Partners, LLC.
Here is WPT CEO Adam Pliska (@pliska007) with more.
— World Poker Tour (@WPT) January 19, 2021
In the address, Pliska outlined continued growth and progress for the brand. “We think this deal will allow the World Poker Tour to do a number of things that it has always wanted to do.”
He added – “For myself and my management team, we’re still here, and it’s business as usual. We look forward to this exciting opportunity and the next chapter of the World Poker Tour. We look forward to continuing to bring the best in poker around the world.”
As per the terms of the agreement outlined in the press release, Element will acquire the WPT for $78,250,000, paying $68,250,000 upfront. This is over a fully guaranteed revenue share of “5% of WPT-branded tournament entry fees on Element-owned or licensed gaming platforms, up to a maximum of $10 million, payable over three years after closing.”
The company’s Board of Directors has approved the transaction. The deal is expected to be closed either by January-end or early next month, pending approval by the company’s shareholders and requisite regulatory approvals.
Once the sale is complete, Allied Esports Entertainment will change its name and continue as a publicly traded holding company focussing on online entertainment, including real-money and other gaming verticals.
WPT Changing Hands – Not the First Time
The WPT, founded in 2002 by Steve Lipscomb with the financial support of Lyle Berman, has, over its nearly two-decade-long existence, become a prominent global poker brand.
The WPT got acquired by PartyGaming (aka partypoker) in 2009 for $12.3 Million that outbid the earlier $9 Million offer from Gamynia Limited. PartyGaming soon merged forces with Bwin Gaming to form Bwin Party Digital Entertainment.
The brand expanded significantly under PartyGaming and even partnered with Hong-Kong-listed Ourgame International Holdings Ltd. to host an event in China.
In 2015, Ourgame acquired WPT for $35 Million. WPT changed owners once again in 2018 when Black Ridge Acquisition Corp, headed by the initial WPT co-founder, Berman, bought off WPT and Allied Esports International Inc. for $213.8 Million.
Berman merged the two entities, and the resultant company had a trading presence on NASDAQ as AESE.
Pandemic Changes Course of Things For WPT
The WPT’s live tour has run full 17 seasons before entering the 18th season, where several of its March 2020 live events had to be postponed or canceled because of the prevailing COVID-19 pandemic. The brand subsequently chose to partner with partypoker to move most of its live flagship events to the virtual felts.
So to say, the live events were canceled, but WPT’s online presence grew. In 2020, the brand’s growth was highlighted by the following factors –
> WPT’s flagship online subscription platform, ClubWPT, witnessed a 61% increase in registrations. The count of new registrations by the end of the third quarter of 2020 had crossed the total new registrations that took place during 2019
> WPT hosted its largest tourney in 18 years, the WPT World Online Championship on partypoker that gathered a record 2,130 entries
> The WPT World Online Championships became the brand’s largest series held to date, with a $100 Million GTD prize pool
> The WPT Television Show grew significantly in terms of distribution in 2020 and peaked in global viewership on both linear and OTT platforms. In the third quarter of 2020, OTT household viewership rose by 368%, and linear household viewership grew by 7% year-on-year
> The WPT moved most of its marquee tournament series online, including the WPTDeepStacks editions
> It returned to India for the fourth consecutive year to host the inaugural WPT Online India (WPTOI) on Adda52 from November 5 to 22
Why Did WPT Get Sold?
Looking at the above stats, the immediate thought that comes to mind is that if WPT did so well in 2020 – despite the numerous challenges – why did Allied Esports sell the brand?
It’s no secret that the pandemic hit the live poker stops the hardest last year. Gaming and esports, on the other hand, enjoyed an unprecedented boost because of the pandemic.
Like the WPT underlines in the press release, the company’s Board has remapped its strategic interests and decided to shed off WPT while exploring strategic options for its esports business. After the WPT, the company may even sell off its esports arm and has engaged Lake Street Capital Markets for the purpose.
CEO of Allied Esports Entertainment, Frank Ng, explained – “Despite the many challenges caused by the COVID-19 pandemic, the WPT business has delivered substantial, impactful results, specifically through its online platforms and services and has made meaningful contributions for the company. In addition, Allied Esports, with its world-renowned HyperX Esports Arena Las Vegas and best-in-class production services, has generated market attention as the esports industry gained momentum during the pandemic.”
“Due to COVID-19’s impact on the Company’s overall revenue generation and profitability timeline, we believe the forthcoming sale of the WPT business will garner significant capital and an avenue to determine new opportunities that will deliver accelerated returns for our stakeholders.”
Not much is known about Element Partners, except that it is a privately held investment vehicle.
The WPT has two live events, the WPT Lucky Hearts Poker Open at the Seminole Hard Rock in Hollywood and the WPT Venetian scheduled for March.
Furthermore, it is still to host three unfinished final tables – the $10,000 L.A. Poker Classic, the $3,500 Borgata Winter Poker Open, and the $10,000 Gardens Poker Championship from its 2020 schedule that got postponed during the pandemic.