03/26/2015 04:30 EDT | Updated 05/26/2015 05:59 EDT

Amaya spinning off Diamond Game Enterprises subsidiary through Innova IPO

MONTREAL - PokerStars owner Amaya Inc. announced plans Thursday to spin off its Diamond Game Enterprises subsidiary through an initial public offering of a newly formed Innova Gaming Group.

Innova will hold all the shares of Diamond Game, which designs and develops games, primarily for the North American lottery sector.

The move follows Amaya's (TSX:AYA) plans announced in January to explore strategic opportunities to divest its non-online gaming operations to pay down debt and reward its shareholders.

The preliminary prospectus omitted any details about expected proceeds from the offering, which is being made through a syndicate of underwriters led by Canaccord Genuity.

Montreal-based Amaya acquired Diamond Game Enterprises last year for US$25 million.

Established in 1994, the Los Angeles headquartered company has facilities in Stoney Creek, Ont., and Missouri. It employs 69 workers.

About 75 per cent of Diamond's US$18.5 million of revenues last year came from lottery activities.

Its main product is the Lucky Tab machine, an instant ticket vending machine that dispenses tickets while simultaneously displaying the results of each ticket on a video monitor. It has about 2,100 gaming machines and ticket dispensers at bingo halls in Ontario and Quebec, as well as in Puerto Rico and 12 U.S. states.

Diamond has 703 LT-3 lottery machines at 27 charitable bingo centres in Ontario, and 32 machines at four bingo halls in Quebec.

Innova said sales of instant tickets in the U.S. have grown by 6.9 per cent annually since 1998, outpacing the overall lottery ticket market and lotto games. About 55 per cent of lottery sales in 2013 were instant tickets, up from 39 per cent in 1998.

Amaya reports its fourth-quarter and 2014 results on Tuesday.

America Votes
The latest polls, breaking news and analysis on the U.S. election from HuffPost’s Washington, D.C. bureau