- »Ups and Downs of Great Canadian Gaming and Apollo
Ups and Downs of Great Canadian Gaming and Apollo
Great Canadian Gaming Corporation and Apollo Global Management ended the tumultuous year that was 2020 with an acquisition deal. Negotiations led to an ultimatum by shareholders, and it worked to push the price up. Apollo changed from its original offer of C$39 per share to C$45 per share, and all interested parties approved.
Everyone expected fairly smooth sailing with regulatory approvals and final paperwork. GCG and Apollo hoped to sign, seal, and deliver the deal in the second quarter of this year.
The deal is still on track, but both companies have had their share of upsets and controversies in the first two months of 2021.
GCG CEO Loses Job for Vaccine
It is no secret that people around the world are anxious for a Covid-19 vaccine.
When the solution to the coronavirus pandemic began distribution in late 2020 and early 2021, countries like Canada implemented protocols. First responders and the elderly were among the first in line for vaccines, and there were tiers of distribution levels from there. Some people, especially those not considered elderly or in bad health, would need to wait at least a few months for their turn.
Great Canadian Gaming CEO, President, and Director Rod Baker didn’t want to wait. The 55-year-old Baker and 32-year-old wife Ekaterina Baker chartered a private plane from to travel from Vancouver to Beaver Creek in Yukon. They planned to obtain Moderna vaccines from the lot being administered to that isolated community comprised of mostly White River First Nation members.
The Bakers posed as workers as a local motel and received their shots.
A series of events then led to a call to Yukon authorities charged with enforcing the Civil Emergency Measures Act (CEMA). Officers tried to catch the couple and did so at the airport as they prepared to leave Yukon. They issued tickets to the Bakers for breaking their isolation requirements – possibly bringing the virus to the vulnerable Yukon community – and lying to officials.
The Yukon government and White River First Nation leaders were outraged and disrespected, as well as concerned for the panic that ensued in the community. That outrage quickly spread across Canada.
Almost immediately, Great Canadian announced the resignation of Rod Baker effective January 24, 2021. The company promoted Terrance Doyle, who had been with the company for 20 years, to Interim CEO.
Allegations in BC Inquiry
British Columbia officials have been investigating connections between gambling operations and money laundering for years. In 2019, the BC government announced a public inquiry into the matter. BC Supreme Court Justice Austin Cullen would oversee the matter.
One of the allegations that led to it all came from a former casino supervisor at a Great Canadian Gaming casino in Richmond. She alleged that the casino introduced new high-roller games, raised betting limits, extended casino hours, and turned their back on potential money laundering activities. A former GCG executive corroborated some of the claims.
Later testimony in 2020 from former GCG Surveillance Manager Stone Lee and former Richmond RCMP Detachment Officer Ward Clapham enhanced the claims. They noted that GCG executives told them to relax their surveillance of River Rock so as not to hurt business. Their warnings about potential organized crime activities went unaddressed.
Some of the latest allegations in the Cullen Commission involve GCG’s then-CEO Rod Baker and a Vancouver Edgewater Casinos executive. Both of them told the BCLC as far back as 2015 that an inquiry into money laundering would hurt the gambling industry.
Worse, former GCG executive Walter Soo testified earlier this month that he promoted expanding VIP options at River Rock Casino. Some of this effort followed news of the US government increasing its investigations into money laundering by Chinese VIP casino players. Soo noted that VIPs needed somewhere new for their business, and River Rock Casino could be the place.
The aforementioned Doyle testified to the contrary, saying that very little of the company’s business was international. He said River Rock’s customer base was local, and GCG never actively pursued overseas-based VIPs. However, there was a noted effort not to upset or disrespect any customers, especially VIPs. Even when River Rock staff accused a VIP customer of sexual assault, that player was banned for only six months and then allowed to return.
The inquiry continues.
Apollo CEO Also Resigns
Great Canadian Gaming has not been alone in its scandalous news.
Apollo Global Management had hired a law firm to investigate itself and CEO Leo Black for connections to notorious (and now dead) financier and child sex predator. After reports in late 2020 that Black had made approximately $50M in payments to Epstein, Apollo wanted to know more. The company coordinated a Conflicts Committee of the Board of Directors to conduct an independent review, and the committee retained Dechert.
The investigation found that Black paid $158M to Epstein from 2012 to 2017 for “financial advice.” This happened after Epstein pleaded guilty to child sexual abuse in 2008. They said the advice pertained to “trust and estate planning, tax issues, philanthropic endeavors, and family office operations.” Dechert also found no evidence that Black played any role in Epstein’s criminal activities.
The final report did find that Apollo never retained Epstein for any services. And Epstein did not invest in any Apollo-managed funds.
However, Black resigned due to the effect that his relationship with Epstein, no matter the nature, would have on the company. He said he “deeply” regretted any involvement with Epstein. He added that he hoped his departure would “reaffirm to (investors) that Apollo is dedicated to the highest levels of transparency and governance.”
Black was one of the founders of Apollo and will remain involved as its chairman. Cofounder Marc Rowan will take over as CEO.
Upon the announcement of Black’s resignation, stocks in Apollo climbed 4% right away and more than 7% the following day.
All’s Well That Ends Well?
It looks like nothing mentioned here will get in the way of Apollo’s acquisition of Great Canadian Gaming.
Apollo recently released its full-year 2020 financial results, showing that the company added $124B in AUM (assets under management). That grew Apollo’s AUM by 38% to put the total at $455B. Apollo’s net income in 2020 was $466.8M with distributable earnings at $892.8M. Total revenues for the year were $2.354B, though down from $2.932B in 2019.
GGC has been able to reopen numerous casinos since the beginning of the year. It started with Casino Nova Scotia – Halifax in early January, and it reopened Casino New Brunswick, Shorelines Casino Belleville, Shorelines Peterborough and Thousand Islands, Shorelines Slots at Kawartha Downs, and Elements Casino Brantford.
As Canada is able to distribute vaccines, federal and provincial governments will slowly but surely lift restrictions on gambling establishments.