The shares dropped nearly 29 per cent to $25 in early morning trading on the Toronto Stock Exchange, but recovered somewhat to closed down $6.2 or 18.31 per cent at $28.64.
Previously Amaya's shares had been on a tear, more than quadrupling in value to an all-time high of $39.25 in the wake of the US$4.9-billion PokerStars deal announced in June.
The transaction was announced June 12, but industry observers said the Montreal-based company had given signals earlier that it was preparing for a large transaction.
Industrial Alliance analyst Neil Linsdell wrote three weeks before the announcement that the company showed its cards when it moved to sell its existing poker platform.
"PokerStars was a little bit bigger than I was probably thinking at the time so it was a little bit more of a shock than anything else, but it was clear...they were looking to make acquisitions," he said in an interview.
U.S. gaming blogger CalvinAyre.com also took notice, writing four days later about the impending merger, citing sources who confirmed that an agreement was in place that could clear the way for the poker brand to return to regulated U.S. markets.
Meanwhile, Amaya said it was co-operating with the Quebec agency.
"To the corporation's knowledge, this does not involve any allegations of wrongdoing by the corporation," it stated in a news release, adding the investigation won't have any impact on its business operations, employees or companies.
The brief statement followed a report in Forbes.com that said Amaya's headquarters in the Montreal community of Pointe-Claire, along with the offices of investment banker Canaccord Genuity and Manulife Financial (TSX:MFC) had been raided Wednesday by the RCMP and Autorite des marches financiers, the Quebec securities regulator.
The RCMP said it simply provided security for the AMF, rejecting the characterization of its involvement as a raid.
AMF spokesman Sylvain Theberge said the authority does not comment on any investigations it is conducting.
Canaccord Genuity, which along with Deutsche Bank Securities, were lead financial advisers on the acquisition of the Oldford Group, parent company of the Rational Group, the previous owner of PokerStars.
"We're co-operating fully with the routine request for information," said Scott Davidson, a spokesman for the Vancouver-based securities dealer that has offices in several major cities.
Manulife, also mentioned in the Forbes.com article, declined to clarify its role with Amaya.
"We are aware of the actions taken by the AMF and RCMP. We are fully co-operating with this investigation," it added in an e-mailed statement.
The Intertain Group (TSX:IT), an online gaming company whose shares plummeted more than 26 per cent Friday to $10.70, said it is not aware of any connections with the investigation and has not been contacted by any security regulator or law enforcement authority.
Earlier this year, Amaya acquired an ownership stake in Intertain and five per cent of its unsecured debt.
Industry analysts said the investigation shouldn't impact Amaya or stall its global growth plans if neither the company nor any of its executives are targets of the probe.
"(But) Whenever a securities regulator shows up there is always cause for concern," said one analyst, who asked that his name not be used.
Amaya needs approval from government authorities to operate online gaming. It was seen as a "clean solution" to enter the U.S. online gaming market because of legal problems involving Isai Scheinberg, father of Mark Scheinberg, CEO of Rational Group.
The elder Scheinberg, a Canadian citizen living on the Isle of Man, is under indictment in the U.S. after being accused along with 10 other online gambling executives in 2011 of bank fraud, money laundering and illegal gambling. They were accused of breaking a 2006 Internet gambling law that prohibits companies from accepting payments for online bets where they are not legal.
PokerStars agreed in 2012 to pay US$731 million to settle Justice Department charges, without admitting wrongdoing.
The poker brands acquired from Rational have more than 85 million registered players on desktop and mobile devices and which has dealt more than 100 billion poker hands since launching 14 years ago.
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