The drive by the online poker industry’s biggest name, PokerStars, to return to the U. S. has suffered another setback, this time at the hands of New Jersey’s Division of Gaming Enforcement.
According to Nathan Vardi of Forbes.com, the DGE decided on Wednesday to suspend review of PokerStars’ application for a license to be a part of the burgeoning New Jersey online gaming scene. The “review suspension” will be for a two-year time frame, but the DGE did leave open the possibility of reviewing that suspension should PokerStars meet a few criteria that the DGE has determined would make it palatable to give PokerStars a seat at the Garden State’s online bounty.
A statement from the DGE said, “The Division (within the two year period) may consider a request for relief to reactivate the application if significantly changed circumstances are demonstrated…the Division’s investigation of PokerStars and its affiliated entities and associated individuals will be resumed to assess suitability.”
“We are disappointed that the N.J. Division of Gaming Enforcement has suspended the review of our application at this time,” Eric Hollreiser, a PokerStars spokesman, said in a statement following the DGE announcement. “We note that the DGE will resume the review of our application if our circumstances change. We will remain in open dialogue with the DGE and will update them on changes in our situation as they occur.”
The biggest sticking point for the DGE seems to be the leadership of PokerStars and its parent company, the Rational Group. The founder of PokerStars, Isai Scheinberg, was one of the eleven men indicted on criminal charges stemming from the “Black Friday” indictments of 2011 and, although eight of the indicted figures have surrendered to authorities, Scheinberg and Paul Tate (the former head of payment processing for PokerStars) have remained at large since that time (Scott Tom, the former owner of Absolute Poker, is the third man at large). Furthermore, the actions of PokerStars post-“Black Friday” raised warning flags for the DGE that they felt warranted a suspension of the licensing review.
PokerStars settled their civil complaints with the U. S. Department of Justice in August 2012 and, as one of the conditions of the settlement, Scheinberg was ousted from his role in decision making for the site. His son Mark allegedly took over the reins of PokerStars per the settlement agreement, but there was enough evidence made apparent to the DGE that the elder Scheinberg was still calling some of the shots in the newly formed Rational Group.
In late 2012, when PokerStars was looking to purchase the troubled Atlantic Club casino in Atlantic City (in a predicated move to establish a base of operations in what was then the infancy of New Jersey’s online gaming legislation), the elder Scheinberg was allegedly heavily involved in the negotiations for the sale of the casino. After the deal fell through earlier this year, the evidence of Isai Scheinberg’s involvement was revealed by the Atlantic Club, furthering the cause for concern by the DGE.
Many in the poker community have railed against the decision by the DGE to not allow PokerStars into the New Jersey market at this time, but the decision is based in sound legal opinion and suitability for licensing in gaming in the state. Although PokerStars settled with the U. S. government without admitting any wrongdoing and paid a huge fine, that was in a civil case. With the elder Scheinberg’s criminal case (and Tate’s) still ongoing, the DGE was loathe to extend a potential license to persons that were under criminal indictment, considering the history of organized crime involvement in Atlantic City when casino gaming opened in the 1970s.
What isn’t being said at this time is what the partner of PokerStars in the New Jersey online gaming industry, Resorts Casino Hotel, will do. Resorts Casino Hotel was looking for the potential partnership with PokerStars as a way of increasing their bottom line and improving their live product (PokerStars allegedly had promised to invest up to $10 million to add a poker room at the Resorts property). The president and Chief Executive Officer of Resorts, Mark Giannantonio, stated following the DGE announcement, “We are disappointed that PokerStars was not issued a license. We are hopeful that they can resolve their issues with the DGE in an expeditious fashion” while refusing to speculate on the future.
