AMERICAN GAMING ASSOCIATION V. POKER STARS

Poker

By Wendeen H. Eolis

Poker Player Newspaper

March 13, 2013

Unlikely collaborations as well as predictable conflicts have marked the relationship between Caesars Entertainment, Inc. (formerly Harrahs) and PokerStars (Rational Group) since the enactment of the Unlawful Internet Gambling Enforcement Act of 2006. For the moment the collaborations seem like bygones.

The American Gaming Association, a trade group that is best known for representing the interests of commercial casinos in Nevada and almost as well known for its close ties to Caesars took the unprecedented step last week of opposing PokerStars’ efforts to obtain a gaming license In New Jersey.

The Association has effectively picked up where the United States Department of Justice left off in its settlement last summer with PokerStars. Last July, the DOJ settled its civil claims against the Company, arising from the government’s ballyhooed prosecution of online gaming. The cases originated April 15, 2011 in the indictment  U.S. v. Scheinberg et al.

The Black Friday cases, as they have come to be known, are not over for PokerStars as far as the AGA is concerned, any more than they are over for PokerStars founder Isai Scheinberg who remains under the cloud of indictment.

Last week, the AGA offered up an unsolicited legal brief to the New Jersey Division of Gaming Enforcement concerning PokerStars’ efforts to obtain a gaming license in the state. The brief pillories the PokerStars brand and implies along the way that Isai Sheinberg remains inextricably linked to the Company despite the settlement order which required him to step down as part of PokerStars management by the end of last summer.

The charges in the AGA brief are unrelenting; the rhetoric is inflammatory. But… “The AGA’s papers are compelling,” say many of the pre-eminent gaming attorneys who help to dissect the brief exclusively for this writer’s report of the rising heat.

Lawyers say to get to the heart of PokerStarse’ suitability for a license one must ask the right questions.

They have reached a consensus on a few of the  queries to ponder:

1. Why did Poker Stars conclude affirmatively that their online poker fare was legal in America after enactment of UIGEA?

2. If PokerStars concluded that their activities were legal post 2006, why did they treat poker player deposits as anything other than ACH deposits for online gambling?

3. Why does PokerStars refer to the DOJ as authorizing, permitting or otherwise blessing its efforts to obtain a casino gaming license anywhere in the United States?

4. Has Isai Sheinberg’s mandated departure from the management of PokerStars actually occurred?

5. Do the ongoing criminal charges against Isai Scheinberg reflect on the current suitability of the Company?

The observations below reflect two caveats offered repeatedly during the course of our discussions:

“One should take into account in considering the brief that the AGA represents a special interest group, which includes many PokerStars would be competitors – some under extreme financial pressure.”

“The Association’s brief wholly disregards the Company’s sterling reputation in the vast world of poker players who idolize the Company for its responsiveness to customers and its integrity in money matters with them.”

Tomorrow: How do AGA  Supporters and PokerStars Supporters Answer These Questions