It’s important to note that these remain allegations and that Baazov has categorically denied wrongdoing.
The news will almost certainly grind progress on the online poker front in California to a halt, but the thornier issue for both PokerStars and the U.S. online poker markets is what will happen in New Jersey?
After an exhaustive investigation that took place over the course of two years, PokerStars was finally approved for a transactional waiver by the New Jersey Division of Gaming Enforcement on September 30, 2015. After software testing, the DGE approved PokerStars for soft-launch on March 16, and for full launch on March 21.
Just two days later, the AMF announcement charging Baazov and others with insider trading hit the proverbial airwaves.
In the span of a week, PokerStars launched its New Jersey website and its CEO was charged with five counts of insider trading, complicating things for the DGE and PokerStars, to the point its operations in New Jersey may be in jeopardy.
Some people are wondering if PokerStars’ run in New Jersey will be cut short by the news.
This concern does have merit.
First, a transactional waiver is not approval for a license. A transactional waiver is more of a temporary authorization the DGE grants following an intensive preliminary investigation. Companies operating under a transactional waiver are still vetted by the DGE before receiving full licensure.
So, while a transactional waiver is a good sign, it doesn’t mean the company is a slam dunk for licensure.
Second, PokerStars’ transactional waiver (granted on September 30, 2015) was for a term of six months from the granting of the transactional waiver, and is set to expire at the end of March 2016 – today.
Third, the DGE also reserves the right to reconsider the license at any time, as noted in its filing:
“The Amaya applicants’ Internet gaming related business transactions are deemed approved for a term to expire six months from the date of this Order subject to final approval of the Regulated Gaming System and each game by the Division’s Technical Services Bureau. The Division may reconsider the granting of this approval at any time;”
That being said, it doesn’t appear the DGE will rescind PokerStars’ transactional waiver at this time.
In a statement to OnlinePokerReport.com on March 30, the DGE stated:
The Division is closely monitoring the matter regarding the insider trading related charges that were filed by Quebec’s Financial Securities Regulator, the AMF, against Amaya CEO David Baazov and other Amaya employees. The Division’s licensing investigation is not yet fully completed. Therefore, Amaya is conducting business in New Jersey on a transactional waiver. As the Division investigation proceeds, we will address this matter with Amaya, the AMF and other licensing jurisdictions.
Based on the DGE statement, it appears PokerStars will continue to operate in New Jersey for the time being, while the DGE continues to vet the company with the AMF charges a major consideration going forward.
Considering the company’s legal difficulties in the United States prior to Amaya purchasing the company, and the increased level of scrutiny its past has initiated from lawmakers and regulators in current legal online gaming markets like Nevada (where PokerStars is prohibited from receiving a license for an undetermined amount of time) and New Jersey (which more or less sent PokerStars to the penalty box for a period of two-years), the new charges against Baazov have the potential to be an absolute game changer in the United States.
If the DGE pulls PokerStars’ license, it’s likely game over for the company in the U.S. for the foreseeable future, as New Jersey is seen as the company’s gateway to the rest of the United States.
A separate, but related, issue these new charges could trigger is a renewed push to include bad actor clauses in any proposed legislation.
Currently, bad actor language hasn’t been included in online gaming bills being considered in states like Pennsylvania and New York, but that could change if the charges stick, or if the issue emboldens PokerStars’ opponents to once again call for exclusion based on the company’s past and the new issues PokerStars is now facing.
Complicating matters is PokerStars’ fall from grace within the poker community. Because of the changes initiated by Amaya, PokerStars is no longer the darling of the online poker community, which will make it far more difficult for the company to rally support against bills with bad actor clauses, should they be introduced.Insider Trading Charges And Regulated Online Gambling: How Will The Two Collide In New Jersey? Steve Ruddock