Just had to wait it out
After nearly a decade, it appears that online poker’s Black Friday ordeal is finally over. On Wednesday, U.S. District Court Judge Lewis Kaplan sentenced PokerStars founder Isai Scheinberg to time served and a $30,100 fine for a single charge of operating an illegal gambling business.
My friend Earl Burton guessed that the 74-year-old Scheinberg would escape prison time and by Thor’s hammer, he was right. Though Scheinberg had pleaded guilty to just the one charge, that charge still carried the possibility of five years behind bars. But his age, the seriousness of the crime, and the current COVID-19 pandemic combined to lead Judge Kaplan to the logical conclusion that incarcerating Scheinberg made little sense.
PokerStars filled the vacuum
To quickly review, the charge against Scheinberg stemmed from PokerStars’ continued acceptance of U.S. customers after the UIGEA passed in late 2006. Pre-UIGEA was the poker boom, the gold rush of online poker, with dozens and dozens of internet poker rooms competing in the U.S. market, even though none were actually based in the country. Party Poker (now called partypoker) was by far the leader at the time, but left the U.S. market after the UIGEA. PokerStars, Full Tilt Poker, Absolute Poker, and UltimateBet were the primary players who stayed and it was PokerStars, specifically, who took over as the dominant site (though all four did strong business).
On April 15, 2011, the U.S. Department of Justice seized the sites and indicted 11 principals of the companies, including Scheinberg. In the years that followed, all but Scheinberg came to some agreement with the DoJ, some receiving fairly short jail sentences. Scheinberg stayed out of the country, but last year, he surrendered to U.S. authorities in Switzerland and began negotiating a plea deal.
No time for good behavior
Part of Judge Kaplan’s lenience may have had to do with PokerStars being the one responsible company out of the quartet that was nailed on Black Friday. Full Tilt was found to have used player funds to pay its owners and executives, so it could not refund U.S. customers once it was shut down. Absolute and UltimateBet disappeared. PokerStars settled with the DoJ, paying hundreds of millions in fines and agreeing to acquire Full Tilt and make its American customers whole. There was also enough money left over for the DoJ to pay back UltimateBet and Absolute players.
“I don’t condone what you did but the world is made of fallible people,” the judge said. “It was a big mistake but should not ruin what remains of your life.”
In a statement to Online Poker Report, Isai Scheinberg said:
PokerStars played an important role in creating today’s global regulated online poker industry by running an honest and transparent business that always treated its players fairly. I am particularly proud that in 2011, when PokerStars exited the United States, all of its American players were made whole immediately. Indeed, PokerStars reimbursed millions of players who were owed funds from other online companies that could not or did not repay those players.