PokerStars May Get DoJ Green Light To Enter US Market

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Friday, January 24th, 2014 | Written by Stephen Smith

According to a report on CalvinAyre.com, the US Department of Justice may be on the verge of amending its policy related to pending Black Friday charges against individuals whose companies previously operated in the US. If confirmed, defendants with outstanding charges against them, such as PokerStars founder Isai Scheinberg, may be permitted to pay fines and make corporate pleas thus resolving all their pending prosecutions, and ultimately paving the way for their company’s return to the US online gambling market.

One stipulation, however, is that those individuals are not US citizens and that their associated companies have not maintained any physical infrastructure within the US borders.

PokerStars shut out of New Jersey

If correct, the surprising new development would come as a huge relief for online poker goliath PokerStars, which has been working tirelessly to re-enter the US market since being shut out in 2011. Despite PokerStars having paid a $731 million fine to end a Justice Department lawsuit against it, and PokerStars’ founder Isai Scheinberg being made to resign as part of the settlement, the former CEO still remains under indictment from the US DoJ.

The fraught situation has effectively precluded PokerStars from being considered for a US online gambling licence, and in late 2012 PokerStars’ parent company Rational Group was denied the opportunity to purchase the ill-fated Atlantic City casino by the New Jersey Division of Gaming Enforcement (DGE). In fact, the Atlantic Club Casino Hotel was subsequently allowed to go bankrupt with a loss of 1,800 jobs rather than see PokerStars take over its operation, and as PokerStars Head of Corporate Communications, Eric Hollreiser, later commented:

“PokerStars does not share the vulture-like management practices that led to the coming job losses and disappointment of thousands of people in New Jersey with the closure of the Atlantic Club. Instead, PokerStars will continue to pursue our goals and remain confident that we will have a strong presence and positive economic impact in the American market in 2014, whether that is in New Jersey or another state seeking the benefits of being home to a world-class online gaming company.”

PokerStars lobbys New York

As PokerStars’ last comment indicates, New Jersey could still be made to rue shutting PokerStars out of the New Jersey market, especially as neighboring New York State recently joined the casino bandwagon and approved the building of seven new casinos within the next seven years. Worryingly for Atlantic City, PokerStars’ top lawyer has since been lobbying to have online gaming legislation added to the gambling mix, and has apparently already held several private meetings with New York Governor Andrew Cuomo.

Early indications also show PokerStars’ idea has already gained some measure of support, with Stuart Shorenstein, head of Cozen O’Connor Public Strategies New York team, apparently, telling Cuomo’s chief advisor on gambling, Bennett Liebman, that it was “a good time for an open architecture.” In other words, if New York is to embrace casino gambling, then why not throw open the online gambling gates, as well.

Needless to say, PokerStars’ lobbying foray could prove a double-headache for New Jersey, which not only lost the opportunity to have the world’s biggest poker room operating in its state, but may now have to suffer the negative impact of having to directly compete with New York for both online and offline gambling business.

PokerStars to re-enter US market in 2014?

The CalvinAyre.com news report then goes on to express optimism Isai Scheinberg’s DOJ problem will be resolved this year, thus ridding the company of the legal hangover which has so far prevented it from launching its own operations in the States. In addition, billionaire businessman and Bodog founder Calvin Ayre may also reap the rewards of a potential DoJ change of stance, as he, too, withdrew from any online gambling in the US and presently has an illegal gambling and money laundering indictment hanging over him.

American Gaming Association resistance

If PokerStars is eventually allowed to re-enter the US gambling market, one body which will be less than pleased is gambling industry lobbying group, the American Gaming Association, which views PokerStars as a threat to the interests of all casino operators across the US. The AGA already played a key role in having PokerStars shut out of the New Jersey market and even filed a brief along, with the NJ Division of Gaming Enforcement, labeling the online poker room a “business built on deceit, chicanery and the systematic flouting of US law”.

As the AGA then went on to explain in its brief: “Any action allowing PokerStars to be licensed would send a damaging message to the world of gaming, and to the world beyond gaming, that companies that engage in chronic lawbreaking are welcome in the licensed gaming business.”