In the past year, Federated Sports + Gaming launched a big televised poker league and purchased another established one. But the big bets went bust and the West Hollywood company filed for Chapter 11 bankruptcy in February.
Now, the two tours have a new owner: casino operator and debt holder Pinnacle Entertainment Inc., which bought the company’s assets at a bankruptcy auction this month.
The company, which formerly operated Hollywood Park race track but has moved to Las Vegas, owns and operates six casinos in the Midwest and South. It has not yet stated plans for the tours, but has already hosted two tournaments during Federated’s bankruptcy proceedings.
Pinnacle’s winning June 14 bid of $4.5 million included $4.2 million for the assets of the Heartland Poker Tour, a series of poker tournaments held in midsize cities and broadcast on regional networks such as Comcast Sportsnet. The remaining $300,000 was for the assets related to the Epic Poker League, a professional tour that Federated launched just last year.
Outside of the Heartland Poker Tour, bankruptcy filings show that Federated brought in only about $37,000 of revenue from January 2011 until February of this year, while racking up about $7.9 million in liabilities. The fast fold came despite backers who are venerable poker figures, such as Federated co-founder Jeffrey Pollack, a former World Series of Poker commissioner. The company even signed up famed professional player Annie Duke to be the Epic Poker League’s commissioner.
Brian McGill, who covers Pinnacle at Janney Montgomery Scott in Philadelphia, said that the tours could be good pickups for Pinnacle.
“They probably want some sort of tour for their (casino) properties,” McGill said. “It adds to the variety of offerings and maybe it gives (them) a slight advantage over competing properties.”
During Federated bankruptcy proceedings, the Heartland Poker Tour kept running. But Epic Poker League’s fourth event of its inaugural season was suspended indefinitely weeks prior to the Feb. 28 bankruptcy filing.
The decision was due in no small part to the major expenses that came with producing the events. The idea behind the league was to attract the best poker players in the world to compete at the Palms Casino Resort in Las Vegas. The company had planned to add $400,000 to the fourth event’s prize pot, while the season-finale fifth event was supposed to be a free roll, in which the league’s top 27 ranked professionals would play for $1 million in prizes – all pledged by the company.
Epic Poker League also spent big on other expenses, such as CBS air time, which cost about $200,000 per hour, according to a person familiar with the arrangement. The idea was that by getting the best of everything, big-name poker players would show and the game would be more broadly appealing to viewers.
“They had to have that to make the players come,” said one person who was involved with the league. “The value was not there if all of those things were not there.”
One major problem was that many of televised poker’s big sponsors, offshore online poker sites such as Poker Stars and Full Tilt Poker, pulled back ad dollars after the Justice Department blocked domestic access to the sites in April 2011.
Pinnacle was in a leading position to buy the tours after lending Federated $2 million to help make roughly $3 million of debt payments to buy Heartland Poker Tour last June from a Fargo, N.D., company. Federated was unable to make payments on the loan.
How Pinnacle will manage the tours remains to be seen.
The two Heartland Poker Tour events hosted by Pinnacle were at its two casinos in St. Louis in March. The tour makes more than a dozen stops a season, and Pinnacle also has a handful of properties that could host other tournaments, in locations such as Belterra, Ind., and Lake Charles, La. It has another casino under construction in Baton Rouge, La.
Meanwhile, the professional players who were hoping to qualify for the chance to play in the $1 million free-roll event have stated in online blog posts and radio interviews they hope the Epic Poker League can be revived.
Analyst McGill said a high-profile tour could help boost Pinnacle’s online presence for the day when online gambling is legal in the United States.
Epic Poker has a game on Facebook, but players can only buy chips, not gamble with real money.
“Legalization is the growth. A lot of people are playing on the Internet,” he said.