Timeline: PokerStars’ Attempts to Join the Regulated US Online Poker Market

Dikembe blocks a shot
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Since 2011, PokerStars has made multiple attempts to gain a foothold in the licensed US online poker market.

But thus far they have received the Dikembe Mutombo treatment:

http://www.youtube.com/watch?v=C_0fyUYB3cA

Widely lauded as the model online poker room by poker players around the globe, PokerStars has found US lawmakers and regulators far less enamored with their product, due in large part to PokerStars’ decision to remain in the US market following the passage of the UIGEA in 2006.

PokerStars’ attempts to gain entry into the regulated US gambling market have been both costly (approaching $1 billion by my estimates) and frustrating, eventually leading to the company being sold to Amaya Gaming, which is just the latest hoop PokerStars has jumped through.

Will it finally pay off?

Below find a timeline of PokerStars’ long and still-winding road to and from the United States – and back again.

March 2011: Wynn buys in

In 2011 PokerStars entered into a tentative agreement with Wynn Resorts that would see the two companies form a “strategic partnership” as they looked to push forward legal online poker in the US at the federal or state level.

April 2011: Black Friday ushers in a new era

Unfortunately, Black Friday put an end to the deal just weeks after it was announced, as Wynn Resorts promptly rescinded its partnership offer following the civil and criminal indictments the company (civil) and its chief executives (civil and criminal) were suddenly facing.

As bad as it was at the time, Black Friday effectively wiped the board clean and was a critical first step toward the legal online poker industries we now see in Nevada, Delaware and New Jersey. Without Black Friday these industries likely do not exist.

December 2011: The Wire Act opens the door

The biggest step came a few months later in December of 2011 when the DOJ changed its previously held opinion in the 1961 Wire Act’s application to online gambling.

The new opinion – authored in September but not released until Christmas Eve – stated that the Wire Act only applied to online sports betting, which several states quickly used to launch online poker, online gambling and online lotteries.

One state that was already prepped for this was Nevada.

Nevada passed online poker legislation in earlier in 2011 which, along with the DOJ’s decision seemed to pave the way for PokerStars to return to the US – if they could find a new partner in the state.

But, like PokerStars has experienced many times since, when you think everything is going to plan, that’s when the wheels come off.

February 2013: Nevada lawmakers pull the rug out

PokerStars first rejection in the US came in Nevada when in 2013 an amendment to the 2011 online gambling bill included a provision disallowing any company from applying for an online poker license for a period of five years if they had accepted bets in the US after December 31, 2006.

For PokerStars, Nevada was a no-fly zone.

May 2013: Delaware quietly says no to PokerStars

PokerStars next denial came in Delaware.

The company was one of 14 that applied to become Delaware’s sole provider of online gambling, but from the get-go PokerStars seemed like an extreme long shot to win.

Not only did the company have the Black Friday skeletons to deal with, but Delaware was going to offer not just online poker but also casino games, something PokerStars had never offered at that point. Nor did PokerStars officially partner with an online casino provider in their Delaware bid.

Little was made of PokerStars being passed over by Delaware (the state chose the partnership of Scientific Games and 888 Holdings) and it can be said that the company never made a serious push to land the job as the provider for the small market.

May 2013: New Jersey Plan A

After being shut out in Nevada and turned down by Delaware, PokerStars next turned their attention toward New Jersey.

New Jersey was seen as the first viable online poker market in the US with its population of nearly 9-million. Unlike Nevada and Delaware, PokerStars was ready to fight for their place in the Garden State.

Furthermore, New Jersey’s online gambling bill did not contain any bad actor language, and state heavyweights were seemingly doting on PokerStars and what the company could bring to the table.

Unfortunately for PokerStars, their NJ Plan A failed when their buyout attempt of the Atlantic Club went awry, with the casino pulling the rug out from under PokerStars and bilking them out of over $10 million and causing licensing issues down the road … as I’ll explain in a moment.

July 2013: New Jersey Plan B

Following their Atlantic Club failure, PokerStars next attempt in New Jersey was to partner with Resorts Casino in New Jersey and apply for a license in the same way other casino/online providers had done.

Everything was moving along as expected, and it appeared that PokerStars could be a part of the November 2013 launch of online gambling in New Jersey, until the Atlantic Club (becoming PokerStars’ Newman) turned up once again to thwart PokerStars.

Adding insult to injury, in court filings regarding the failed sale the Atlantic Club alleged that Isai Scheinberg, one of the co-founders of PokerStars, was still playing a key role in the company and was spearheading the negotiations with the Atlantic Club.

The Atlantic Club’s assertions were viewed by some one of the factors that led to the New Jersey Division of Gaming Enforcement suspending PokerStars license application, as the DGE specifically cited concerns over Isai Scheinberg and other individuals continued involvement in the company:

“The Division’s determination is based primarily on the unresolved federal indictment against Isai Scheinberg for the alleged violation of federal gambling statutes, namely, the Illegal Gambling Business Act and the Unlawful Internet Gambling Enforcement Act (UIGEA), and the involvement of certain PokerStars executives with Internet gaming operations in the United States following the enactment of UIGEA,”

August 2014: Amaya sale puts New Jersey Plan C on the table

New Jersey is back in play now that PokerStars has been sold to Amaya Gaming.

Even before the sale was finalized this past week, Amaya has already begun licensing talks with the New Jersey Division of Gaming Enforcement.

Before it was suspended by the DGE, PokerStars license application was nearly complete according to poker blogger DiamondFlush, which along with licensing talks between Amaya and the DGE having already begun has given many people the impression PokerStars will have an iGaming license (or transactional waiver to be more specific) in hand in the very near future.

August 2014 – ???: The Civil War raging in California’s gaming industry

Of course the crown jewel of U.S. online poker is California, and PokerStars desire to be a part of that market has caused what can best be described as a civil war among the tribes and card rooms in the state.

PokerStars acquiring a license in New Jersey will go a long way towards eliminating future “Bad Actor” clauses in states like California.

So while New Jersey may be the entry point, California seems to be the final destination.

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Steve Ruddock
- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.