Here’s All Of The Reasons Why People Think PokerStars’ NJ Launch Is Being Delayed

This article may be outdated. Get the latest news on New Jersey here.

In the wake of Amaya’s June announcement of plans to purchase PokerStars, the outlook for a 2014 launch of PokerStars NJ seemed bright.

Fast-forward five months, and that outlook has shifted from sure thing to long shot.

PokerFuse is reporting that PokerStars’ launch in NJ is now postponed until 2015, noting that “[p]olitics are being cited as one of the hurdles that have yet to have been cleared.”

A number of individuals with knowledge of the process have confirmed to OPR that PokerStars’ New Jersey launch is encountering unanticipated delays.

But the nature, severity and ultimate cause of said delays are the subject of no small amount of debate.

More on that in a second.

Why rapid approval was expected

First, some quick context as to why the consensus expectation was that PokerStars would be up and running rapidly in NJ:

But that momentum dropped off dramatically – and unexpectedly – sometime in early October.

Why the process has stalled

Neither the DGE or Amaya / PokerStars have offered any comment on the situation.

The last time the DGE responded to a request for comment was to confirm on October 17 that the “Amaya/PokerStars acquisition investigation remains open and ongoing.”

In the absence of any official explanation, a number of theories have been offered, publicly and privately, to account for the gap between the expectations of a fall launch and the reality of a delay bordering on the open-ended.

1) Normal delays on the technical investigation side

This was the explanation I heard most often when rumblings that the process had fallen off track were just starting to gain steam in mid-October.

In this narrative, there is an unspecified delay in the technical investigation process, caused by a bottleneck on Stars’ end or on the DGE’s end, or some combination of the two.

The appeal of this explanation has faded as the delay has stretched on.

But it was one that made sense to me – technical investigations can get hung up at any number of points. For example: I could see PokerStars deciding to try to push through a newer version of the platform than the DGE had previously seen and encountering some delays as a result.

And, given the gravity of the approval, it’s easy to see why the DGE would want to take things slow and steady.

2) It’s Christie’s Fault Version A: Adelson asked

This explanation – or some version of it – has become increasingly popular among credible industry sources over the last week or two.

In this narrative, Gov. Chris Christie is delaying the decision on PokerStars (and, depending on who you ask, may ultimately quash the application) to curry favor with mega-donor Sheldon Adelson, both to help secure Adelson’s support for Christie’s presidential run in 2016 and to prevail upon Adelson to build a casino in the Meadowlands.

I continue to believe it doesn’t quite pass the smell test.

Some of the immediate questions that come to mind include:

  • Why wouldn’t Adelson want PokerStars in NJ? Isn’t that something of a dream scenario for CSIG?
  • Why the sudden intervention? NJ regulators were saying positive things about the Amaya purchase into the fall. Did Christie just become aware of the situation in late September?
  • Would Christie risk the terrible media optics and existential threat to the credibility of the New Jersey gaming regulatory system simply to throw Adelson a bone this early?
  • Is Christie really willing to risk the financial future of one of AC’s remaining casinos to do a small favor for Adelson?
  • Doesn’t that make Christie look incredibly weak to Adelson going forward?

… but that doesn’t mean it isn’t happening.

3) It’s Christie’s Fault Version B: Waiting on the lame duck to fly

This is something of a variation on #1, but distinct enough (and repeated enough) to break out, if only briefly.

In this narrative:

  1. Christie believes RAWA has a credible chance of becoming law during the lame duck.
  2. Signing off on PokerStars’ approval comes with some potential political blowback for Christie in 2016.
  3. Therefore, there’s no upside for Christie in letting PokerStars’ approval go through until the lame duck wraps with RAWA unpassed.

This story requires fewer leaps of faith than #2. And it offers a plausible explanation for the “delay, but don’t deny” status that some perceive to be hanging over Stars’ application.

Finally, it explains (at least to a degree) why Christie would suddenly spring to action weeks into the process: His perception of RAWA’s chances in the lame duck evolved.

4) It’s Christie’s Fault Version C: He’s hardballing Amaya

One of the more intriguing (albeit less popular) theories.

In this narrative, Christie’s administration recognizes the immense amount of leverage they hold with Amaya, a company that took on billions in debt to acquire PokerStars with a payback plan at least partially predicated on accessing the emerging US market.

Needing some sort of win to help counter the massive gap between official administration revenue projections for regulated online gambling and reality, the Christie administration ups their ask from Amaya, demanding a partial – or even total – relocation of PokerStars’ global operations, and the hundreds of jobs and millions in economic activity that would come with it.

5) It’s a “certain PokerStars executives” problem

When PokerStars’ NJ license application was paused by the DGE, the agency offered the following comment:

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 State following the enactment of UIGEA.

In this narrative, the sale of PokerStars / Rational to Amaya satisfied the “primary concern” (Scheinberg) by severing ties between Scheinberg and the company.

But, the speculation then goes, Amaya failed to satisfy the “certain PokerStars executives” condition implied in the statement, and the delay hangs on negotiations between the DGE and Amaya on who should stay and who should go.

Simple enough.

It doesn’t stretch belief that the DGE might not have had a definitive strike list when the application was paused and that a new name (or names) may have come on their radar post-purchase.

6) PokerStars isn’t ready

And finally, the most pedestrian explanation (although Occam would be a fan): PokerStars isn’t being held up by Christie or the DGE, but instead by PokerStars.

In this narrative, in the aftermath of a rapid, radical acquisition by Amaya – one kept incredibly well under wraps, and presumably a surprise to the vast majority of staff – PokerStars simply isn’t able to pull together the product they want in time to keep pace with the regulatory process.

Why it makes sense:

  • PokerStars spent much of the last year in a transition from PokerStars 6 to PokerStars 7. This platform transition was a major event that would have consumed, and will continue to consume, significant development resources.
  • And PokerStars 7 would have been, and will continue to be, prioritized well above any development tasks for New Jersey.
  • The New Jersey product brings PokerStars into contact with regulatory requirements that are unfamiliar to the company. There’s some learning curve involved.
  • The NJ product brings PokerStars into contact with a variety of vendors – geolocation, new payment providers, KYC – that are unfamiliar to the company. Integrating those vendors takes time, testing and resources.
  • PokerStars may have shelved – or at least down-shifted – their NJ development efforts once the ACC deal fell apart and the DGE paused PokerStars’ license application.

Why it doesn’t:

  • PokerStars is a company that has built a reputation for rapid, effective technological deployments.
  • Other NJ platform providers were able to get up to speed in a similarly tight time frame last year prior to launch.

……

When this chapter of PokerStars’ saga in New Jersey is closed, it may come to light that none of the above explanations actually account accurately for the delay.

Or that some combination of politics, logistics and personal agendas not so neatly boxed into a coherent narrative is to blame.

In any case, the chapter now seems unlikely to end before the year is out.

- Chris is the publisher of OnlinePokerReport.com. Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.
Privacy Policy