Can PokerStars keep its US dream alive after NJ snub?11th November 2013 8:27 am GMT
So PokerStars did not get a licence in New Jersey…yet. The New Jersey Division of Gaming Enforcement (DGE) announced transactional waivers for almost everyone that has applied for one on Friday. The notable absentee was PokerStars.
It is still a work in progress, they say: “Our application remains under review by the New Jersey Division of Gaming Enforcement and we remain committed to working with the Division to complete the review process.”
Everyone else says (hopes) they don’t have a chance.
The few smoke signals arising from DGE suggest it will be difficult. If you go all the way back to April, when PokerStars was applying for an interim casino authorization (ICA) to allow it to buy the Atlantic Club, the division asked for another 90 days to investigate after the regular 90-day period had elapsed.
“When the Division tells you in an ICA process that you have another 90 days and it knows you have a drop dead date [for completing the acquisition] and doesn’t offer to do anything before the deadline, that is a very big message,” says a source, who was close to the deal.
However, the standards required for an interactive service provider’s licence are considerably lower than those required to buy an Atlantic City casino. But in not delivering a transactional waiver on Friday, DGE could be sending another fairly big message. After all, what more does it need?
Remember, DGE has handed out “transactional waivers” – not licences. These allow operators and suppliers to launch an internet gaming system while still going through the full licensing process, which could take another six months. DGE director David Rebuck has said that it is rare for companies granted a transactional waiver not to be granted a licence but that does not make it impossible. In its rush to get everyone live by November 26th, it is thought that the Division has done less investigating than it normally would with a transactional waiver.
The Division has also let it be known that it does distinguish between pre- and post-UIGEA operations. It is hard to understand this. Stars can claim with some justification that UIGEA did nothing to change the definition of what constituted illegal gambling, it merely penalised payment providers that facilitated activities that were already deemed illegal. (Some will point to Nelson Burtnick’s role here but as he has left the company, that could be forgiven. After all, every operator has cleansed itself somewhat – witness Ruth Parasol and Russ de Leon’s recent exit from bwin.party as the most obvious recent example.) Stars has never taken sports bets – as some others have. It has never admitted wrongdoing – as some others have.
However, licensing standards in New Jersey are controlled not just by online regulations but by the Casino Control Act, which emphasises the importance of good character in granting licences. Regulators have a wide degree of latitude in defining what that means. Given the greyness of the law and the fact DGE has let everyone else off their foibles (thus far), one can only presume that the crux of the problem here is Isai Scheinberg.
Stars’ founder has not cleared the criminal indictment that was handed down on Black Friday. Isai officially handed the reins to his son Mark following the settling of the civil case with DOJ but anyone dealing with the company will attest that Isai still calls the shots. DGE was supposedly made well aware of this during the document production process when Stars attempted to buy Atlantic Club.
While bwin.party’s CEO Norbert Teufelberger is in the midst of a criminal trial in France, it would be understandable if DGE considered a criminal indictment at home of more immediate concern. Isai’s lawyers should be furiously negotiating with DOJ in New York. Or maybe it’s time for Isai to retire?
All those things considered, Stars’ prospects of licensure look shaky. However, PokerStars has survived and thrived after tougher trials. One should never write off this remarkable company.
Whichever way it goes, it looks like it will be hard for Stars to get up and running by November 26th. However, it’s going to be hard for a lot of people to get up and running by November 26th. Tune in tomorrow for more on them.