On Thursday according to eGaming Review, groups that reportedly included Pinnacle Entertainment, William Hill, All-In Entertainment, and Chili Poker CEO Alex Dreyfus convened in Washington, D.C. to bid on the assets of Federated Sports and Gaming, which filed for Chapter 11 bankruptcy earlier this year. Wicked Chops' Steve Preiss told PocketFives on Wednesday around 7:30pm ET that the auction will spill over into Thursday. No winning bids have been publicly announced.Federated's Heartland Poker Tour (HPT) was bid on separately on Wednesday and a high bid was entered. The next round of the auction, which is slated for Thursday, is for bidding on all Federated assets, which includes the Epic Poker League, Global Poker Index, the EpicPoker.com website, the Epic Poker Facebook product, and the HPT.
You'll notice that the HPT is being bid on twice. Preiss explained, "The first round of bidding on Wednesday was just on the HPT, just that asset alone. There was a high bidder, but we won't know who that is publicly until tomorrow. There's a chance that whoever is coming in to bid for the remaining Federated assets could swoop in and out-bid the first bidder."
In April, Federated reported nearly $8 million in liabilities, debt that will likely come into play during the auction. "For me, the interesting part is will the bidder bid out and take care of all of the debt and keep the existing management in place," Preiss told PocketFives. "If the bidder for Federated does not include the debt, then what does that really do for Epic? Will the poker community and players support the brand then? Will they do the final event, the $1 million championship freeroll?"
In April, Federated reported only $37,000 in cash on hand and owed $2.1 million alone to the aforementioned Pinnacle Entertainment.
Why would a company like Chili Gaming or William Hill bid on Federated's assets, then? Preiss speculated, "If they're looking for a U.S.-facing brand, then my gut would be if they're going for all of the Federated assets, the Epic brand has no value, so why are they bidding on it? You'd be better off starting your own tour and not bailing out of all of the debt. I have absolutely no idea why they're doing it. The only asset with any value is the HPT."
Preiss continued, "Epic should go away. Its management team was as bad as any management team can be. I don't understand why any company would bid on it. If I were a shareholder in a company bidding on Federated, I would riot." Federated's staff includes the likes of co-founders Annie Duke and former World Series of Poker Commissioner Jeffrey Pollack.According to the financial filings that came out earlier this year, Duke was paid $299,784 during her tenure with Epic, while Pollack was compensated $226,652. Its tournaments ran on CBS and Velocity in what appears to be a time buy.
The Heartland Poker Tour could be a valuable asset for a non-U.S. company looking to enter the U.S. market. As Preiss observed, "HPT is profitable. They operate around 18 events per year. They had no debt. The only reason they're in this mess is because Federated dragged them into it. The acquisition of HPT makes all the sense in the world."
According to EGR, Federated's assets "are expected to raise a sum in the region of seven-figures."
An e-mail placed to Duke seeking comment on the auction was not returned at press time.
