News Category: Poker Player Newspaper 1983-2016

Just as the 2013 World Series of Poker was beginning to wind up its engines for the main event at the Rio Hotel and Casino in Las Vegas, Congressman Joe Barton (R-TX-) rolled into town for his third visit to the annual WSOP; this time to rev up support for his updated poker bill in the U.S. House of Representatives. The Poker Players Alliance hosted a Town Hall Meeting designed to preview Barton’s online gambling bill HR 2666, the “Internet Poker Freedom Act of 2013,” which was subsequently introduced in the U.S. House of Representatives, July 12.

While the PPA has been beating the drums for Barton’s “poker only” bill it is also applauding the Internet Gambling Regulation, Consumer Protection and Enforcement Act of 2013  (HR 2282) introduced by Congressman Peter King (R-NY) last month. The King bill proposes “poker plus” other casino game options excluding, sports bets.

Unity is hard to come by in the business of online gambling and this week, from out of the blue, came a new wrinkle in the debate of online gambling consumer protections. The complexities in bringing online gambling to U.S. players seamlessly across the country grows at every turn, and so does the cast of characters with unique skin in the legislative game—at both the state and federal level.

Barton and King—Different Visions

The King bill follows in the footsteps of Congressman Barney Frank’s (D-MA) online poker bills and the expanded online poker bill prepared but never introduced by Sen. Harry Reid  (D-NV) with now retired Sen. John Kyl’ (R-AZ). It was their plan to move federal online gambling legislation to the finish line last year. The Reid bill included broad consumer protections and was quietly endorsed by the AGA.

The Barton bill is most appealing to the “poker only” crowd. It effectively carves out poker from other gambling games and recognizes it as a game of skill as per Federal Judge Jack Weinstein’s opinion in U.S. v Di Cristina. That case has been appealed by the Government and has been heard. It is likely several months will pass before a further ruling. The Barton bill is narrow in scope and not generally regarded as sophisticated in addressing relevant issues to more conservative lawmakers. For them the Barton bill does not have have enough teeth in it. The bill is plainly designed to extricate poker from the grip of anti-gambling legislation such as the Unlawful Internet Gambling Enforcement Act that was enacted in 2006. In both federal legislative proposals now on deck, the authors provide opt out provisions. They also respect the rights of states that have invested in intra state online gambling statutes.

Senate Hearings Pop Up Suddenly

The latest potential complication in aggregating support for either bill is the hearings scheduled by the Senate Commerce, Science and Transportation Sub Committee on Consumer Protection, Product Safety and Insurance “to examine the expansion of internet gambling, focusing on assessing consumer protection concerns.”

Sub-Committee Chairwoman Claire McCaskill will begin the process of testimony at 10 AM Wednesday, July 17. The witnesses include:

Mr. Chuck Canterbury – National President, the National Fraternal Order of Police

Mr. Matt Smith – President, Catholic Advocate Mr. Tom Grissen – Chief Executive Officer, Daon, Inc. (a biometrics software firm)

Mr. Jack Blum – Attorney (specializing in money laundering compliance)

In a seven page Republican staff memo obtained as we were going to press, the subject matter is introduced thusly:

“This will be the Commerce Committee’s first hearing on the proliferation of Internet gaming and its implications for consumers in the 113th Congress, although the Committee has examined gaming issues in previous Congresses. The Commerce Committee has broad jurisdiction over both internet communications and consumer protection matters, generally.

The memo, sets up  and then sets forth its central purpose for the hearings. “This hearing will focus on potential consumer harms related to online gaming in the absence of a clear legal landscape or consistent oversight.” It provides opponents to expansion of online gambling a chance to regurgitate  consumer protection issues – real and imagined. These issues have been widely debated for years in political and philosophical discourse. The sudden appetite for hearings occurs in a time frame apparently designed to thwart near-term consideration of either the Barton bill or the King bill.

Congressman Dean Heller (R-NV), a supporter of online poker, is the ranking Republican on the sub-committee. One particularly interesting acknowledgement in the memo was the statement, “although UIGEA neither legalized nor made unlawful Internet gambling, per se, it added enforcement tools to thwart unlawful Internet gambling payment transactions.”

At the end of the staff missive, the urgency to the hearings is duly noted with a reference to Rep. Joe Barton’s bill which “would, among other things, establish a program for the licensing of Internet poker by the states and (Indian) tribes.”

2012 Federal Legislative Effort Fell Apart

Last year, after a rocky start in the collaboration, Heller worked with Senate majority Leader Harry Reid (D-NV) and Senator John Kyl (R-AZ) who had finally come around to support online poker. They made seemingly prodigious, albeit relatively quiet efforts to bring forward a “poker only” gambling bill acceptable to both online interests and the American Gaming Association. The legislation was to have called for licensing, regulating (and taxing) online poker activities, and was to provide  provide substantial consumer protections. Toward the end of the year it gained momentum. But, the project took second fiddle to other Congressional business, leaving Congressmen King and Barton, longtime proponents of online gambling legislation, to don follow up pitcher mitts, this year.

Washington Insiders Are Skeptics Now

The mood inside the Washington Beltway, among proponents of regulated internet-based poker, was hardly ebullient before this round of Senate hearings came about.

The PPA which is championing the Barton bill (a media conference call is scheduled for tomorrow) has a long row to hoe, but this grassroots advocacy group that counts more than a million members is proving slowly but surely, poker players can be change agents. The PPA is building a solid community that is on track to transform the image of poker as a gambling game to one of skill for those who are dedicated and as a respectable pastime to rest of the poker universe.

Hail Caesar!

While the PPA is pressing its members to become activists in support of favorable legislation, up in the ivory tower of Caesars Palace Gary Loveman, Chairman of Caesars Entertainment Inc. (the biggest gaming company in the world), is holding his cards close to the vest as to the Company’s exact position in the dicey game of politics and poker.

For years, Caesars (formerly Harrahs) promoted “poker only” as the means by which to persuade lawmakers to take their first leap of faith into online gambling, having assured itself online poker could be made safe, fair, and easily restricted to adults and properly insulated against ties to organized crime, money laundering, and the like.

Likewise, the AGA, which Loveman also chairs until year end, is pondering its position and options in support of federal legislation. Nevada is already on the road with passage of the first online intrastate gambling legislation in the country’s history.

Sheldon Adelson Reflects an Evolved Position

The history of online poker advocacy is rich and the characters are colorful. Most of the casino moguls have weighed in, often altering their positions as their views have evolved. These days, Caesars, MGM, and Boyd are clear supporters, but the terms they seek are still murky. In contrast, Sheldon Adelson, who obtained a license for online gaming with European off shore regulators in 2003 has changed his tune on the merits of online gambling.

Adelson’s company, Sands Corporation, teamed up with PokerStars to produce the PokerStars.net North American Poker Tour Venetian at Venetian Hotel and Casino in Las Vegas, just 2½ years ago. Now Adelson says he “is morally opposed to online betting”.

Stars and Wynn Fall In and Out of Love Quickly

Special mention is also warranted in the matter of the ill-fated conditional partnership between Wynn and Poker Stars. Steve Wynn fell in and out of love with PokerStars as fast as you could shake a stick. Confident momentarily that his anticipated partner knew more than anyone as to how badly misinformed the U.S. Department of Justice was in its promise to bring online poker to its knees in America — Wynn quickly reverted, showing his would be partner the exit door no sooner than the DOJ accomplished its mission — in a single day.

Summing Up

One gaming industry expert summarized what was said by many queried for this article. He asserted, “The poker industry has made concrete progress this year — no matter what happens — thanks to Congressmen King and Barton in their respective bills. They have moved the needle and are propelling online gaming legislation in the right direction.” He adds, “The poker community can take comfort in the introduction of both the King bill and the Barton bill as instruments used to keep the concept of federal regulation, consumer protection and taxation alive, and part of the debate.”

Either or both bills would reinvigorate the poker community in terms of participation in the game say several online players who yearn for the return of online poker in their living rooms.

According to the consensus of lawyers consulted for this article, the King bill, besides being all inclusive, (poker plus) is the more sophisticated and better drafted bill. It solves the constitutional issues not addressed in the now dead “Reid/Kyl” bill and as the Kyl bill succeeded so now does the King bill in also steering away from playing favorites, while addressing the concerns of the states, the lotteries, the Native American community, current brick and mortar casinos in Nevada, New Jersey, and elsewhere, horse racing and all of the other special interest groups.

The King bill according to the same gaming industry expert quoted earlier, “offers a true level playing field.”

Regardless, neither the King nor the Barton bill will reach victory beyond preliminary debate in the House without a companion bill in the Senate and the support of leadership in both parties. We should expect to face a continuing wait.

Last weekend, Kristen Bicknell, a twenty six year old cash games grinder from Canada, turned up at the 2013 World Series of Poker Ladies Championship as an unknown player. She proved not only ample survival skills but also the power of discipline, desire, and determination. A self-taught poker player, Bicknell took down first place prize money of $173,922 and the coveted white gold WSOP Ladies Championship bracelet for her effort.

Ladies Championship Leaves Men by the Wayside

The field was 954 starters—all women. Last year an estimated 15 players in the pool were males — mostly pros — apparently enticed to exercise their legal right to rain on the Ladies Day Parade by visions of a higher return on investment (ROI) than in an open event. They may have had their last chance.

The  ladies only field reflected an amusing and controversial legal twist on the buy-in rules for the 2013 WSOP Ladies World Championship. WSOP brass outfoxed male would be party poopers. They stopped such potential impostors in their tracks with a gambit that proved 100% effective in maintaining the Ladies Day as a singularly female “do.”

In consultation with company lawyers, WSOP organizers increased the full buy-in price for the event to $10,000, but offered ladies a 90% promotional discount — thus preserving the traditional $1000 buy in for ladies and drastically changing the ROI for men.

WSOP personnel say the Ladies Championship offers novices a more collegial and protected environment in which to ply their poker skills and make their luck. For the most part, the rank amateurs and veterans alike welcome the party-like atmosphere that is fostered for this event. Participants get to live the dream of vying for a bracelet in a gentler environment than most open events.

Pros, who got their start in the ladies event generally agree it provides an ideal arena to increase familiarity with the rules of engagement and to help build the confidence needed to transition seamlessly into coed competitions. WSOP officials insist the discounted buy-in ticket for the ladies is a worthy promotion for women and not an arbitrary ban of men.
Nevada Law Creates New Opportunity for Women

Recently enacted legislation in the state of Nevada seems to put the WSOP in the catbird seat as the law explicitly states:

It is not unlawful and it is not a ground for civil action for any place of public accommodation to offer differential pricing, discounted pricing or special offers based on sex to promote or market the place of public accommodation

The Origins of the WSOP Ladies Event

Poker lore has it that the Ladies Event at the WSOP was originally put in place to entertain the wives and girlfriends of players. For years it was scheduled as the only tournament on Mother’s’ Day and intended as a day of rest for the men preparing to play in the next day’s final $10,000 World Championship.

In 1977 the first ladies event attracted 93 women players. It was only one year later that a woman dared to enter the main event. Since that momentous occasion only a relatively small percentage of women have taken giant steps in the poker world.

While there are a fair share of successful women poker pros who scoff at the notion of a Ladies Day poker championship in any form, the prevailing sentiment as obtained from pros and amateurs in attendance last week was applause to the WSOP for pulling out all the stops to give the ladies their due.

Pseudo moralists, obnoxious disruptors, and even more righteous and conscientious objectors held their fire for another day, allowing an event for ladies that is intended to grow women’s attendance at the WSOP.

What is the Role of Poker’s “First Lady?”

Linda Johnson, dubbed the “first lady of poker” by poker personality Mike Sexton and referred to as such by this reporter possibly as far back as the late 90s, was not in the forefront of support for ladies only tournaments for many years (nor was this reporter). Over time, however, Johnson effectively positioned herself center stage as an advocate for women in poker. And she has often distinguished herself as the quintessential role model.

In 1993 Johnson purchased CardPlayer Magazine. Her network of media connections grew quickly, allowing her to promote many of her activities and causes including recognition of women. An interview with poker reporter Pamela Maldonado, this past May is exemplary. The “First Lady” ticked off an impressive but less than fully inclusive list of very notable women in the poker world. Johnson’s list included most of the women pioneers in high stakes poker tournament competition who preceded her in the annals of poker history as women with special achievements.

More specifically, she named three of the five women for whom WSOP commemorative chips were issued (1996) to honor them and celebrate “women’s milestones.” The recipients she mentioned were: Barbara Freer, the first woman to enter the WSOP main event; Barbara Enright who became the first (and only) woman ever to reach the final table of the WSOP main event (1995); and Marsha Waggoner who cashed for the first time in the main event in 1993 (19th). The late Barbara Gold Samuelson, a noted cash games specialist who reached the highest finish for a woman as of 1994 (10th) was also part of that group as was this reporter, who was the first woman to cash in the main event in 1986 (25th) and the first to do so twice in 1993 (20th).

While Johnson and I are not personal friends, I believe that personal differences should be irrelevant to factual presentations and fair reporting of women’s achievements in poker. I salute Johnson and all the women on her list that reflect special achievements. Johnson’s formidable poker resume is featured in Wikipedia http://en.wikipedia.org/wiki/Linda_Johnson.

Johnson’s “shout outs” in her interview with Maldonado were numerous and gracious to deserving women. For example, she sends her regards to Jennifer Harman, Annie Duke, and Kathy Liebert – women who have shown the longest staying power as poker stars. Annette Obrestadt was noted, too. She made history as the first WSOP-E champion, at the tender age of 18. She also references younger über talents: Vanessa Selbst, Vanessa Rousso, Liv Boeree, Xuan Liu, and Maria Ho – ladies poised to have even more storied poker careers.

In the world of poker celebrations of women, Johnson frequently has been center stage. I recall my first bird’s eye view – the Johnson Roast hosted by Sexton at the Bicycle Club back in 2000 — her favorable views toward women’s poker tournaments had yet to evolve. In that same year, Johnson chatted up Positively Fifth Street author, James McManus at the WSOP with recommendations of women in poker to interview for his upcoming article which became the foundation for the book.

Original “Women (in Poker) Hall of Fame” was Established by PokerPages

Johnson’s wide range of activities and media friends notwithstanding, she has not been an omnipresent force in all things poker. In particular, she was not part of the internal brain trust of PokerPages.com which originated the concept of a woman’s page and established the “Women’s (Poker) Hall of Fame” around the turn of the millennium.

Tina Napolitano (with her husband Mark), the former owner of the innovative and highly referenced poker information portal (now owned by PokerStars), researched and found documented credentials for each of the women honored on the list. In a telephone interview with this reporter last year, she said, “I saw nothing out there; I wanted to pay homage to women who deserved it.” She added, “I avoided inclusions or exclusions based on whims of any individual or clique.” In recent years, many of these women (with a documented place in the history of women in poker) have missed Johnson’s personal tip of the hat and have been overlooked in relevant media coverage that traces its roots to her.

The pokerpages.com Women’s Hall of Fame has survived three generations of owners and is still available to be seen:  http://www.pokerpages.com/women/hallofame/index.htm

WiPHoF Reinvents “Women in Poker Hall of Fame”

A second Women in Poker Hall of Fame, was founded in 2007 by Lupe Soto as part of her burgeoning ladies poker tour business – the Ladies International Poker Series. WiPHof produced its first class of honorees in 2008.

Soto told this reporter last year that she met Johnson and sought her ideas and counsel for her planned venture and suggestions of women to honor. According to one WiPHoF honoree, the idea came to Soto after Barbara Enright was installed as the first woman in the WSOP Hall of Fame.

WiPHoF formalized its plans, deciding to honor an elite group — four most deserving women of accomplishment in poker. Johnson was part of the inaugural class of the reinvented “Women in Poker Hall of Fame.”

June Field who was a poker industry activist, the original owner of CardPlayer, and a WSOP bracelet winner well ahead of Johnson, did not make the cut until the next year. Likewise Cyndy Violette, a trailblazer for women in high stakes competition going to back to the 80s also drew back burner status until the following year. And these are but two notable omissions in the first class of WiPHoF honorees.

Curious selections and omissions from WiPHoF honors over the years have led to questions about the operations and selection process — and increasingly among women who see themselves as unfairly delayed or denied.

In the course of researching WiPHoF’s operations and selections processes, I reached out to members of its board last year and invited Soto and Johnson to interview for this article. Soto took a brief telephone interview.

Author’s Statement: I admire the meaningful contributions of WiPHoF members, notwithstanding my personal decision (and disclosure of it prior to my probing inquiries), to put myself out of consideration as a candidate for a future WiPHoF class.

Who Cares about WiPHoF?

Most women queried for this article agree that induction to WiPHoF has enhanced the profile of its honorees and probably helped Johnson to get on the radar screen of voters for the WSOP Hall of Fame. Be that as it may, women who think of themselves as having been “shafted” by WiPHoF are crying foul on the seemingly tottering organization, calling it more sorority than honor society.

This summer there is no WiPHoF hoopla during the WSOP and no dinner planned to honor or celebrate new nominees this year, according to Soto. She says, “WipHoF has changed its charter.” According to Soto, henceforth the organization will celebrate women every two years. Her website still asserts that WiPHoF inductions are annual affairs.

Meanwhile, if Soto (and her collaborators) can figure out how to assure reasonable transparency, high integrity, and an unfailing commitment to fairness in the nominating and selection process, I vote for her induction ahead of any other future candidate.

Women in poker deserve fair deals. The WSOP proved its commitment to women at this year’s Ladies Event. Will WiPHoF follow suit next year?

Last March poker aficionados attending the annual “ATLARGE” gathering in Atlantic City, were energized like never before. The buzz in the Atlantic Club and Casino and Hotel (ACC) poker room that weekend was all good news. PokerStars, a staunch supporter of the online poker community had announced its intentions to purchase the Atlantic Club Casino and Hotel (ACC), the property at which they were meeting. New Jersey had recently legalized online poker. And the world’s largest and most popular online poker site was poised to obtain an Interim Casino Authorization (ICA). PokerStars had fast plans to take online poker forward in a big way on these American shores.

The ATLARGE revelers along with ACC personnel and associates of PokerStars celebrated together their expectations of a fast slam dunk deal. Steve Eisenstein, a member of the law firm Lum, Drasco, and Positan, LLC, and an avid poker enthusiast was one of the attendees at the ATLARGE festivities; he could not have imagined at that time what would come of the deal, all too soon. Two months later, the New Jersey law firm at which he practices was hired by PokerStars to sue the ACC in an effort to preserve its investment and protect its plans to purchase the ACC property. It was the Firm’s first engagement with Poker Stars according to Eisenstein, who was otherwise more circumspect than informative as to the possible next steps in this progressively messy situation. He is schooled in the ways of big companies. He offered up the PokerStars’ Director of Communications, Eric Hollreiser as the right man for media inquiries.

Poker Player/Lawyer in Local Law Firm is on the Case (LDP)

Although PokerStars selected law firms from among the better known and higher priced AMLAW 200 to defend the Company and its principals in the U.S. Department of Justice’s prosecution of their online poker activities in America, for this matter the Company relied upon a small local law firm with long roots in the Garden State dating back to 1870. PokerStars’ selection of LDP reflects its well known view of the online poker community as a reservoir of talent to do work on its behalf.

Although his primary specialty is in employment law and related litigation, name partner Wayne Positan was tapped as lead counsel for the PokerStars lawsuit against ACC. Positan knows his way around the New Jersey Courts and is highly regarded among practitioners in firms large and small who have come to know him. The matter has been a shared effort according to Eisenstein, a business lawyer with substantial experience in environmental law and real estate. He also includes litigation as a regular part of his portfolio. And, Eisenstein, a former organizer of ATLARGE gatherings brings to the table an understanding of the poker world to go with his legal skills.

Why Did ACC Jilt Poker Stars?

PokerStars’ path from its Isle of Man headquarters to the shoreline of New Jersey has been periodically disrupted over the years by a fair share of sticky wickets, but by all outward appearances, during the early spring, Stars was on track to purchase the struggling casino — subject to approval of New Jersey regulators – until the ACC saw a way out of the shockingly low price of 15 million dollars it had negotiated for itself as the sale price – before legalization of online poker in the State and prior to its improved earnings in the early months of 2013.

The Birth and Death of the Deal

It is no secret that PokerStars has had its eye firmly trained on becoming a pre-eminent force in the new world of licensed, regulated, and taxed online gambling in the United States following settlement of the civil charges brought against the company in 2011 by the U.S. Department of Justice.

As part of the settlement agreement reached, PokerStars bought the brand of its arch rival, Full Tilt and paid a massive fine to the U.S Government without admitting wrongdoing. (Neither did the DOJ withdraw its allegations of wrongdoing). The final lynchpin to the settlement was Isai Scheinberg’s obligation to give up his leadership role with PokerStars, at least until/unless a resolution of his personal case, at which time the matter could be reviewed. Scheinberg remains indicted and has yet to face the related criminal charges that were brought against him in the case U.S. v Scheinberg et-al.

PokerStars and the ACC reportedly opened discussions in October. Poker Stars insiders say the initiative was a strategic move by the Stars that reflected an abundance of “well placed confidence” in the prospects for legalization of online poker and for approval of a casino license to the Company.

The process of regulatory consideration, however, went into an unexpected full on tailspin. The American Gaming Association opposed licensure of PokerStars. Then PokerStars was delayed or dawdled in its final submission for the license application. And, the hearing to determine the Company’s suitability for a license was ultimately tied up by New Jersey regulators in a manner that made it impossible for PokerStars to meet the deadline as stipulated in the sale/purchase agreement.

The ACC was seemingly better advised than PokerStars in the development of the business terms of the agreement. The conditional deal allowed the ACC to terminate the negotiations if final agreement were not reached by a date certain — April 26, 2013. By that time, Stars had invested and stood to lose at least 11 million dollars it had put into the proposed venture.

On the designated termination date of April 26, as permitted in the terms of the contract, the ACC said farewell to the deal that had been inked. During the colder days of winter, online poker legislation had passed and had become law in New Jersey. In the early months of 2013 the ACC’s earnings improved. After giving notice of termination to PokerStars, ACC’s COO, Michael Frawley took to a public podium to announce the Company’s decision to walk away from the deal and to up the price for the sale of the property.

PokerStars Moves to Quash ACC Possible Efforts to Sell Fast to Others

PokerStars cried foul and asserted bad faith dealings on the part of the ACC. Stars turned to Attorney Wayne Positan to lead the way in a bid to obtain a Temporary Restraining Order that would prevent the ACC from making a fast sale to others while the Court considered the dispute. PokerStars was successful in obtaining a TRO but the victory was short-lived.

On May 7, Attorney Eisenstein wrote to his inquiring friends on BARGE, a popular internet poker forum site, “Since it’s now on record and no longer a secret I can report that we just had argument this afternoon on whether to dissolve the TRO I got yesterday for PokerStars and the Judge put a decision on the record to continue the restraints without modification and to hold a hearing next week on an injunction.” His last line was the understatement of the week. He said, “Busy times.”

Ten days later, the New Jersey Superior Court Judge who granted the TRO had a change of heart. Judge Raymond Batten lifted the TRO he had previously granted to PokerStars. Thus, Eisenstein’s law partner Positan was left to sing the blues in the jurist’s courtroom. According to lawyers generally familiar with the case and with  the usual limitations of a TRO, the outcome was not so surprising.

The Beat Goes On

Was PokerStars misled or did the Company lull itself into believing the contractually determined termination date was of no consequence. The consensus of lawyers queried for this article is that this question is likely to be debated in mutually bruising litigation.

Despite PokerStars open indignation over the conduct of the ACC in this matter, the related legal papers have prompted various lawyers across the country to shake their heads over the contract language that passed muster with PokerStars’ legal beagles. The consensus is that PokerStars, no matter how it proceeds from here, has put itself in quite a pickle.

Old News or Revelations: Isai Scheinberg is Still Involved With PokerStars

Even more curious are the pleadings that were put before Judge Batten concerning Isai Scheinberg’s participation in the deal. The ACC’s chief financial officer, Eric Matejevich references substantive discussions of the proposed sale between him and Scheinberg during a time frame and in a manner that suggests that PokerStars violated its settlement agreement with the U.S. Government. One lawyer says, “If PokerStars allowed Scheinberg to play a leadership role in this matter, the Company and its founder may have overplayed the hand.” Another summed up the prevalent view: “Isai believes in his innocence and in his company—completely.”

The surprise move in the gambits of gaming companies seeking to position themselves for future fortunes in the online and commercial gaming market came last week from an unlikely source, the Atlantic Club Casino and Hotel (ACC) in Atlantic City New Jersey. The casino insulted Rational Group  U.S. Holdings (PokerStars), dismissing its friendly bid and preliminary agreement to buy the property, suddenly, as too little too late.

PokerStars did not take the insult or the alleged injury to its plans lying down. On May 5, PokerStars responded with a lawsuit and yesterday the online poker behemoth followed up, marching into court to obtain a temporary restraining order against the casino company [Read the Court Filing]. It was granted a preliminary injunction that prevents a fast sale to any other suitor while PokerStars makes it case to complete the purchase if it can obtain an Interim Casino Authority from New Jersey regulators.

For the moment, PokerStars claims in scathing allegations of bad faith on the part of the ACC, its continued intentions to proceed toward completion of the purchase, noting the considerable investment it has already made in the property.

PokerStars’ plan to purchase the floundering casino/hotel and to sink some 40 million dollars into upgrading it, was upended in an announcement by the Atlantic Club’s Michael Frawley, chief operating officer of the company. The ACC is owned by Colony Capitol.

Last Wednesday, Frawley announced that PokerStars’ conditional purchase agreement for the property had expired. He further explained therefore the Company terminated the deal pursuant to the terms of the agreement. The termination notice had been served on PokerStars several days earlier.

Atlantic Club Pats Itself on the Back

It appeared that PokerStars was caught flat-footed by Frawley’s statement, which bluntly rejected PokerStars as a suitor. But it turns out that PokerStars was more cunning than mystified when it referred to a “purported notice” of termination received from the ACC.

Frawley exuded confidence in his words, saying, “The advent of New Jersey’s online gaming legislation has changed Atlantic City’s future for the better, and The Atlantic Club is absolutely going to be a part of that future.” Frawley gave further insight into his company’s mindset by noting, “The Atlantic Club’s 2013 revenue and net revenue trends are proof positive that customers are rediscovering us and our popularity is higher than ever.”

PokerStars responded by referencing a “confidentiality agreement” as making it “inappropriate to comment” on the matter. A probing media corps was not buying that idea as anything other than a refusal of transparency as to what occurred.

PokerStars Communications Director, Eric Hollreiser, soon changed course, effectively, pre-empting any accusation against his company of reverting to its old ways of stonewalling media—except when it suited the Company’s goals.

A day later, Hollreiser resurfaced with a more direct and notably candid public statement, saying, “It was the Rational Group’s expectation and understanding, based on the ongoing dealings between the parties, that the closing date would be extended to allow the transaction to be completed.”

The PokerStars statement matched up with the Company’s completion of the final steps of the license application required for purchase of the Atlantic Club—after learning the American Gaming Association had successfully filibustered consideration of the PokerStars license application to a date way outside the April 26 deadline. The Casino Control Commission would have until August 10 to reach a decision, and regulators had, earlier in the month, made that point clear. The further statement also offered an implicit warning to the ACC of troubled waters ahead.

Did ACC Raise Without the Goods?

The Atlantic Club has more than flexed its muscles; its owners appear to have analyzed their increased earnings and the passage of a law to legalize online gaming in New Jersey and concluded the math on the deal no longer added up. According to Poker Stars, in its legal papers today, the New Jersey Casino attempted to obtain an additional 6 million dollars from PokerStars as the bartering chip for a short extension period that would be of no use to PokerStars.

Gaming industry insiders and legislators in New Jersey who have been queried on the collapse of the deal claim that on both sides, big egos and increasingly hostile posturing has gone over the brink.   According to one source associated with New Jersey’s bifurcated regulators who have oversight responsibility for casinos, a mess of unparalleled proportions is emerging, making the fracas between PokerStars and the American Gaming Association over PokerStars suitability as a licensee a mere sideshow for the moment.

In retrospect, PokerStars’ comment late last week to media, has taken on new meaning: “The Rational Group remains entirely committed to resolving this situation and to our investment in New Jersey.” He did not further explain this grace note but the legal papers say it all.

Poker Stars Has a Big Picture Plan

While the breakdown in the planned deal could not have been anticipated by the public and may not have been foreseen by PokerStars either, Rational Group has been gearing up on multiple fronts to take the U.S. market by storm.

The Company has been building a vast array of relationships in New Jersey, sending out friendly flares to casinos across the country, and murmuring sweet nothings into the ears of potential casino partners and sponsors from one coast to the other. Word from across the pond and across the U.S is clear; PokerStars has big plans to rebuild its footprint in America.

The wheels of justice will move forward in the lawsuit that now exists between PokerStars and the ACC (a hearing is scheduled for May 17).

PokerStars May Still be Valued in New Jersey

While PokerStars cools its heels a bit and re-evaluates exactly how it will reach its goals in the States, the American Gaming Association is taking a victory lap. The AGA has effectively stalled PokerStars’ bid for instantaneous dominance in the re-emerging online gaming world on these shores.

The vast majority of the U.S.-headquartered casino industry has mobilized via the AGA to express its collective complaint against admission of PokerStars into the American gaming fraternity, citing Stars alleged criminality pursuant to the prosecution of its online gambling operations by the U.S. Department of Justice.

Settlement of those claims was effectuated between the parties without agreement as to the innocence or culpability of PokerStars’ conduct established in the settlement papers.

Regardless of the currently swirling charges leveled by PokerStars against ACC, there is still no certainty that Stars will be found suitable for a license in New Jersey.

That said, PokerStars’ promise to bring jobs, civic commitment, and many millions of dollars to the Garden State cannot reasonably be dismissed out of hand by the Statehouse. And, friends of PokerStars say it is not likely that the determined Scheinberg family will recede into the background of a setting sun on the Shore anytime soon.

Additionally, PokerStars’ next move in New Jersey may be tied to other events. Reconsideration of the MGM’s bid for a permanent license is on the table. One former casino regulator who now represents a major casino property predicts, “If the MGM obtains its license, PokerStars’ arguments for a license would get only better (assuming it can arrange a purchase with one of the state’s going casinos). He objects, however, to licensing either company

Unfathomable Outcomes are Possible

In the business and politics of online poker, machinations, twists, turns, and outcomes unfathomable at one moment have been known to become stark reality the next.

In the world of unfathomable, there is always the possibility that Caesars and PokerStars will set aside their penetrating tiff of this past winter. Showboat, a Caesars property is on the block in Atlantic City. If the Atlantic Club deal ultimately falls through could PokerStars come calling on Caesars?
It wouldn’t be the first time arch-rivals in the poker world later acquire a taste for one another.

PokerStars’ purchase agreement for the Atlantic Club Casino and Hotel in Atlantic City has expired. In a public statement, this morning, Michael Frawley, COO of Atlantic Club Casino and Hotel has confirmed that the purchase agreement is terminated. Nevertheless, it is too early to jump to conclusions.

There is nothing said thus far to suggest that the two companies cannot re-cement an updated agreement. If necessary, PokerStars could update its completed application which has been submitted to the New Jersey Casino Control Commission.

When it comes to online poker, machinations, twists, turns, and outcomes unfathomable at one moment have been known to become stark reality the next.

PokerStars May Still be Valued in New Jersey

Governor Chris Christie, a proponent of a full court press to revive Atlantic City, faces massive pressure to find the means to recovery from Hurricane Sandy. PokerStars’ promise to bring jobs, civic commitment and 40 million dollars to the project cannot so easily be dismissed. The current re-consideration of the MGM’s bid for a permanent license remains on the table. The MGM’s partnership with the daughter of a reputed crime figure in Macau created a log jam last time around.

The Company is making a new bid, producing documentation that the daughter has a smaller stake in the partnership. She is also in litigation against her father. Ergo the case is apparently made that the relationship should be in the “no worries” category.

One former gaming regulator who wishes to remain anonymous insisted on hearing the news insisted, “If the MGM obtains its license, PokerStars arguments for a license would get only better, but neither should get it if the State wants to keep up its standards as online gaming re-emerges in this country.”

Last month PPN published an article detailing the position of supporters of the American Gaming Association’s opposition to PokerStars obtaining a casino license and another one outlining the position of supporters of PokerStars’ efforts to obtain a license in the Garden State. The participants were primarily lawyers. On his twitter account, Caesars’ Interactive’s spokesman Seth Palansky made favorable mention of the PPN article that detailed  the views supportive of the AGA position.

PokerStars’ Alternatives

Meanwhile there are mumblings coming in from the Isle of Man that PokerStars top brass are confident the company will obtain a license – in NJ or elsewhere in the U.S. long before the Fertitta Brothers or anyone else can outpace them.

And in the world of unfathomable, there is always the possibility that Caesars and PokerStars will set aside their penetrating tiff. It wouldn’t be the first time arch rivals in the poker world later acquire a taste for each other.

While most of the country was glued to the movements of Boston area law enforcement agents immediately after the Boston Marathon bombings, the U.S. Attorney’s Office for the Southern District of New York had it sights set elsewhere on a sting against organized crime that was tied into a few game runners and players in high stakes poker games in New York. April has been a tough month for poker in New York City, more than once.
NY Poker Highlighted in Bust of Russian–Based Organized Crime Ring

At the crack of dawn on April 16, 2013, federal agents were on the march to pick up their prey in Los Angeles, Philadelphia, Miami, and California, as well as New York. They moved in with plans to break the back of an internationally based gambling enterprise rooted inside the Russian Federation.

The accusations made by the Government marry illegal gambling activities to organized crime and put some of New York’s best known nosebleed poker games in the hands of old school “Russian Mafia” with locally based operatives intertwined in their operations.

Arguably, the April 16^th bust shone the brightest light over high stakes poker games in the underground world of New York poker — ever.

According to the US Attorney’s 84 page indictment, the cast of characters includes high-level Russian-surnamed mobsters from two organizations, a bank branch manager from JP Morgan Chase, an art dealer whose gallery resides in the tony Carlyle Hotel in Manhattan, and a bunch of sports bettors and high stakes poker players most of whom are better known to their poker game buddies as part of the New York gambling world’s population of “good family men.”

And then, there is Molly Bloom. She was the poker hostess with the mostess. She attracted to her high-stakes poker games well-marketed poker pros, captains of industry and finance, movie stars and sports stars. She arranged poker events in glamorous homes and hotels on one coast and then the other – supposedly with many if not all of the accoutrements of a high end gentleman’s club.

The indictment is short on details but there is nothing murky about the seriousness of the charges or the defendants. The charges include illegal gambling operations, wire fraud and far-flung money laundering. Worse for some of the defendants are claims of a conspiracy under the Racketeer Influenced and Corrupt Organizations Act (RICO). RICO charges provide for prosecution of conspirators behind a crime. The cast of characters listed in the indictment is spelled out with a recitation of both formal names and nicknames of the defendants.

Penalties range from 10 years to 90 years in prison. The poker game runners/promoters purportedly associated with the targeted gambling enterprise have become inextricably caught up in the fray — at least for now. Few New York poker game “entrepreneurs” have ever feared serious jail time for gambling offenses before.

Mayfair and Diamond Clubs Stung

In April of 2000, the town’s two largest and most popular poker clubs of that time — the Mayfair Club and the Diamond Club — were simultaneously raided by cops. The peace officers showed up with battering rams and cocked guns as if they expected to find the equivalent of an Appalachian National Convention of La Cosa Nostra in progress.

The Government failed to link the clubs to drug deals, loan sharking, or any other criminal activity often associated with organized crime. Nevertheless, the City closed down these clubs soon thereafter. The clubs’ operators, investors and employees lost their cherished lifestyle, but otherwise were left alone to go on their merry way.

While doing research for another writing project, one senior law enforcement agent involved in the sting, confirmed what the club operators knew when they got hit. The officer said, “The precipitating causes” for the scrutiny of the clubs “was twofold.” He went on to explain that an FBI agent stumbled upon the Mayfair in the course of investigating a sports betting operation, and a vice squad officer made a random visit to the Diamond Club where years earlier, he had slapped the club’s hands for newspaper ads that advertised for customers. Ultimately the top earning sports bettor under investigation went to prison.

After the clubs were closed, a high level New York City official who spoke on condition of anonymity said, “The clubs were closed mostly because their activities had become “too extensive for law enforcement to turn a blind eye.”

PokerStars, Full Tilt Poker & Absolute Poker / Ultimate Bet Stung

Some observers say online poker suffered similar scrutiny by the Government looking, mostly aimlessly, for links to organized crime as online poker surged from small businesses into a multi-billion dollar industry. One public acknowledgement of such efforts occurred in the course of the notorious prosecution of online poker by the U.S. Attorney’s Office of the Southern District of New York in US v. Scheinberg et al April 14, 2011.

The case targeted 11 key figures associated with the three largest and most popular online poker sites serving U.S. customers. Companion civil cases were brought against the companies – PokerStars, Full Tilt Poker, and Absolute Poker/Ultimate Bet.

There were blaring headlines of criminality and greed. And, at one point in the prosecution of the cases, the DOJ raised the specter of ties to organized crime. The DOJ quickly retreated from that notion, however, after being politely, but firmly challenged by counsel to PokerStars founder Isai Scheinberg who had been faintly implicated in a footnote of the Government’s legal papers. The Justice Department has never uttered a further peep on this subject. Counsel was none other than Mary Jo White, a former U.S. Attorney for the Southern District. She is presently Chairman of the Securities and Exchange Commission.

An Opening for Organized Crime Emerges

Since the New York poker sting of 2000, law enforcement authorities have become more intimately familiar with poker, and not just online poker which has yielded worldwide publicity. The Feds as well as local precincts periodically cast their eye on the world of underground New York poker. Over the next several years there were few raids unless a club was too noisy or brought too much foot traffic to suit the taste of the neighborhood.

For the most part, police appeared to return to a laissez-faire policy despite a spate of robberies at these clubs, which became known to them. Things changed fast, however, after the murder of a poker player during an armed heist at one of the City’s small new clubs that opened in 2006.

Suddenly poker clubs were seen as dangerous venues by police and poker players alike. The lack of a respectful relationship between clubs and local police created a big opening for expanded involvement of a criminal element—one that, according to the indictment, has played a real role in the operations and “protection” of some of the biggest poker games in town. It has yet to be seen if the Government will succeed this time in pairing poker games with organized crime. But meanwhile, New York poker players ask, “Isn’t  there  enough proof that licensing, regulating and taxing both live and online poker in New York is the safest bet?”

In a video-link proceeding, from a California courtrooom, Ray Bitar, a founder of Full Tilt Poker, was sentenced today by Chief Judge of the US District Court of New York, Loretta Preska, to time served and an estimated forfeiture of $40,000,000.

In keeping with the unexpectedly compassionate deal reached between Government Prosecutors and Bitar’s counsel, Jack Baughman of Paul Weiss et al, Ray Bitar is now positioned to seek the heart transplant required to save his life.

Bitar was previously represented by Attorney Jeff Ifrah. Ifrah is now the center of a malpractice lawsuit brought by Chad Elie, a payment processor for Full Tilt Poker who pled guilty in the Black Friday case against him. Elie is now serving a five month prison sentence.

The application by PokerStars for an Interim Casino Authority (ICA) license at the Atlantic Club Casino and Hotel in Atlantic City appears to be in limbo for the moment. The Casino Control Commission (CCC) has yet to announce the next steps in the process, but the Communications office of the CCC has confirmed that the licensing deliberations take place in meetings open to the public.

AGA and PokerStars Are Subject to a Unique Bureaucratic Process

Here is a quick review on recent events and a primer on the bureaucratic process that pits the American Gaming Association (AGA) against PokerStars in a bid to delay if not deny the online poker company’s entry into the American-based gaming market.

The AGA has opposed PokerStars’ application for a license and has asked the New Jersey Division of Gaming Enforcement (DGE) for permission to participate in its license application hearing. PokerStars has shot back an indignant response to the DGE objecting to the AGA request. It has also leveled pointed accusations in the direction of the AGA and Caesars Entertainment as pots calling the kettle black.

The CCC which has responsibility for casino licensing matters received the AGA papers from the DGE. The DGE is the body that accepts petitions; the CCC has no authority to do so. The bifurcated duties of these two regulatory bodies are clear to them but murky for most of the rest of us.

The DGE may make licensing recommendations but it is the CCC that is charged with issuance, suspensions, and termination of casino licenses. The DGE will be responsible for issuing online licenses to casinos qualified by the CCC. So now you’ve got the picture of the bureaucratic process.

In the matter of the PokerStars application for an ICA, the CCC has elected to take a step back after the warring parties rattled their sabers relentlessly at each other. The regulators are reportedly studying the situation before proceeding further on the application.

There Is More Than Two Sides to this Story

While we search for more clues as to the likely outcome and the timetable for resolution of the skirmish, Poker Player Newspaper (PPN) continues to explore the respective positions of the various protagonists. PPN has been advised by a broad spectrum of gaming lawyers and white collar litigators that credible cases can be made on all sides of this story.

For starters, attorneys are deeply divided concerning PokerStars’ decision to continue U.S. facing operations after the enactment of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). For its part, the U.S. Department of Justice has consistently insisted that the intent of the Act was to end online betting in America, but it has not litigated this issue to conclusion.

The diverse group of lawyers queried, generally concur that the DOJ is involved in its own perception of proper enforcement. They note, however, that it is the job of a judge to interpret the law. One attorney quipped that practitioners straddle the fence with guesses on how judges might rule and how aggressively law enforcement agencies might pursue their view of a legal infraction. But it is clear that there is room for differences in perspective as to  the legal impact of the Unlawful Internet Gambling Enforcement Act which triggered the grand investigation of online poker businesses.

The Position that Favors Stars

Last week, the position of supporters of the American Gaming Association was fleshed out; this week lawyers lawyers who favor PokerStars’ application for approval of a casino license begin to expound upon their reasons. At the outset, they suggest that Stars had a reasonable legal basis on which to proceed with their U.S. facing operations post UIGEA. They say the Company was mistaken in its understanding of the risks it took. But the attorneys queried suggest that attempts by competitors to tag the Company as unsuitable for a license are mostly self-serving  efforts that disregard a legally complicated set of facts.

The commentary in response to various questions posed to the avid supporters of PokerStars is filled with smart legal nuggets. Their fuller comments and responses to PPN questions will be published in a separate piece – to assure sufficient consideration of the various eye-opening  perspectives.

Meanwhile, for the time being PokerStars, the AGA and the public have been left to cool their collective heels. The CCC has published the agenda for its April 10th meeting with nary a word on the PokerStars application. Stars has still copped plenty of attention in a flurry of activity surrounding the seaside gambling mecca this past week.

Linda Johnson Lobs Another April Fool’s Day Joke

Monday brought an April Fool’s Day joke from “First Lady of Poker” Linda Johnson. In an email blast, poker’s “hostess with the mostess,” informed a world of poker friends she was leaving Las Vegas for her dream job as a card room hostess at a new venue on the east coast. She allowed that the offer was too lucrative to refuse.

Then her good friend Jan Fisher, poker strategy teacher extraordinaire, chimed in with a follow up email. It cast Johnson as poised to take up residence at PokerStars’ “new card room” in New Jersey. Fisher then described the Garden State in terms the Governor might not relish, laying on thick that the big draw was big bucks.

Friends of the perennial April Fool’s Day pranksters found the imagined scenario hilarious, but a few folks at the Atlantic Club and Poker Stars as well as an aide at the New Jersey Statehouse who learned about the missives that morning were a bit less amused. By afternoon the story evaporated with Johnson proclaiming to her Wednesday Poker Discussion Group, “The joke worked.”

Showboat is on the Ropes

The next stunning rumor to surface in AC last week was circulated discretely among gaming industry insiders. The facts have yet to unfold, publicly, but according to a highly respected gaming lawyer with close ties to the powers that be at Caesars, the largest casino stakeholder in New Jersey has decided to close or sell its Atlantic City Showboat property.

Governor Chris Christie and casino regulators are now forced to consider the impact of a lot more jobs in peril — beyond the floundering Atlantic Club Casino and Hotel — which is depending on the anticipated PokerStars bailout option.

Does this put more pressure on regulators to embrace PokerStars and the boatload of cash it is reportedly ready to lay out in this economically ailing state? Political pundits and gaming industry insiders are beginning that analysis.

The CCC and DGE: Bifurcated Roles

At the end of the day, the New Jersey Casino Control Commission will determine if PokerStars is to be granted an Interim Casino Authorization (a temporary license) for the Atlantic Club Casino and Hotel. According to a source at the Casino Control Commission, the Division of Gaming Enforcement will rule on online gaming licenses, granting one to PokerStars only if it first passes muster for a casino license in the State.

Borgata Poker Room Changeover

While the warring protagonists and an array of bureaucrats wrestle with the conundrum of PokerStars as hero or imposter amid mounting fear of further woes for the New Jersey economy, let us applaud Atlantic City’s Borgata Hotel and Casino and Spa with a tip of the hat to Stan Strickland, the departing poker operations director and a welcome mat to Vincent Alonge who has been named interim live games poker manager.

White smoke is already billowing, with a decision on the permanent replacement for Strickland. I’ll have to eat my hat if someone other than Alonge has gotten the nod. Strickland, the Borgata poker room manager of the past ten years, has just migrated to the Sunshine State to head poker operations at the Isle Casino. He built and maintained, seamlessly, the most profitable poker room and the most loyal base of poker players in Atlantic City.

Alonge defected from the Taj Mahal Casino Poker Room a year ago to join Strickland’s operation as an executive poker host. In another era, the Taj featured the most profitable poker room in town. Alonge’s casino experience includes table games as well as a longtime position as a poker shift manager. And at a time the Borgata is putting stronger emphasis than ever on its perennial commitment to customer service, Alonge looks like  the quintessential candidate to invigorate that initiative. Alonge is believed to have been Strickland’s #1 pick as his replacement. The selection of Alonge as Stricklnd’s replacement “puts the Borgata poker room in extraordinary hands” according one longtime player who has his pulse on the thinking inside the card room.

This Too Shall Pass

Previously proven prognosticators are also predicting that PokerStars will receive approval in the U.S. for a casino license — sooner than later. For the time being, PokerStars seems intent on keeping its eye trained on the ball and not on the flak. Casino marketing executives and poker personnel from New Jersey to California say Stars is engaged in bold efforts to cultivate relationships with commercial casinos, tribal gaming properties, and specialized gambling venues, at the ready to enhance their brand across the country.

The battle for supremacy in the emerging online poker market stateside is in full swing with a series of gambits by the American Gaming Association (AGA). The AGA has effectively delayed PokerStars’ anticipated acquisition of the Atlantic Club Casino & Hotel in Atlantic City by its letter and legal brief in opposition.

PokerStars is perceived as a white knight among poker players but as a black sheep by members of the AGA.

The various bones of contention are coming into sharper focus but some relevant matters of fact are becoming more murky. Lawyers supportive of the AGA stance and of AGA members most likely to be affected sooner than later have become increasingly vocal in response to this reporter’s request for help in dissecting the issues — in plain English.

Questions and Answers

More than a dozen lawyers representing both sides of the issues contributed questions and comments last week. This week the AGA supporters (on condition of personal anonymity) reviewed their position and various documentation in an effort to flesh out the general consensus among them. One of the participants stepped up to provide a voice on behalf of the prevailing views of AGA supporters interviewed. PokerStars supporters in the group are expected to provide enhanced responses with references to legal documents shortly. In the interim some of their initial comments are repeated to remind readers there are two sides — if not more — in this evolving story.

Note: For the avoidance of doubt, readers are advised that both PokerStars and the AGA declined to comment on the Q & A  for this article  through their respective communications offices and none of the responses reflect authorized comment by either organization.

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

AGA: The UIGEA made it a crime to receive monies in connection with “unlawful internet gambling.” It defined “unlawful internet gambling” as a “bet or wager [that] is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made.” Thus, the statute made clear that any wager must comply with the law of the jurisdiction in which the player is located (where the wager is “initiated”), as well as where the operator (or the operator’s gaming servers) are located. No State authorized PokerStars to offer internet gambling to its residents. Unauthorized gambling is unlawful. PokerStars’ contention that poker is not gambling finds no support anywhere. Every state treats poker as gambling or as an otherwise controlled game. PokerStars brazenly chose to ignore the law simply because it thought it could. And it made hundreds of millions of dollars as a result.

PokerStars: The Company consulted the most erudite lawyers in the most respected firms in America. They were persuaded that they were on the right side of the law and would ultimately win the legal battles.

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?

AGA: No legitimate financial institution would process online gambling transactions in the wake of the UIGEA.  According to poker forum posts and poker blog entries, players identified and questioned repeatedly strange descriptors for their deposits. PokerStars desperately wanted to find banks that would allow it to process payments as gambling; hence, its efforts to acquire ownership interests in banks or otherwise to pressure smaller banks to allow it to process. No lawful business needs to disguise its payment transactions. The conclusion is inescapable: PokerStars knew its activities were unlawful. 

PokerStars: PokerStars makes clear it was unable to do business it had a right to do, and therefore was left no alternative but to circumvent the system in order to do business that should not have been prohibited.

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

AGA: Good question. PokerStars likes to tout the language in its settlement agreement stating that nothing in the agreement, “is intended to or shall limit the PokerStars Companies . . . from offering real money online poker [in the United States] if and when it becomes permissible to do so under relevant law.” That language merely reflects the fact that the Justice Department has neither authority over nor interest in questions of suitability for licensing. Gambling is reserved to state authority. Moreover, even in areas of federal regulation, DOJ does not address the consequences of a settlement or even a guilty plea in other regulatory settings.  

More telling is what PokerStars fails to mention. The settlement agreement expressly states that, “this Stipulation and Order of Settlement shall in no way constitute any reflection upon the merits of the claims and defenses asserted respectively by the United States and the PokerStars Companies.” In other words, DoJ continues to maintain that PokerStars violated the UIGEA and the Illegal Gambling Business Act, committed bank fraud and engaged in money laundering. 

PokerStars: PokerStars quotes Government statements that support the Company’s position; the DOJ has no issue with PokerStars’ efforts to obtain a license when, as, and if, online gaming is permissible under law. The Company also assails casinos as fearful of legitimate competition not criminal activity on the part of PokerStars.

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

AGA: No way to know for sure; however, poker players have reported that Isai participated in a three-day PokerStars conference in October 2012 (3 months after the settlement) and that he seemed to have been treated as a key decision maker at the company. For example, Isai was part of the PokerStars team delegated to discuss the relaunch of Full Tilt Poker in 2012.

PokerStars: While making no specific references to this issue, PokerStars slams the AGA as making false and defamatory statements. PokerStars insiders defend Scheinberg’s sensitivity to accusations against his character, insisting that the man believes his own story and they do, too.

5. Do the ongoing criminal charges against Isai Scheinberg reflect on the suitability of the Company’s leadership which includes his son Mark Scheinberg?

AGA: The allegations against Isai – allegations that also were in the civil forfeiture complaint against the PokerStars companies – depict widespread and pervasive activity. Virtually every payment transaction involving PokerStars and its US players for several years involved fraud and related criminality. It is impossible that only Isai and one or two others were aware of and authorized that activity. 

Mark Scheinberg and Pinhas Schapira were and remain senior executives or directors who have been with the enterprise since its beginnings; Hazel is finance director, with ultimate responsibility for payments; and Telford is general counsel. It strains credulity to contend that they did not know what was happening. Moreover, it is undisputed that PokerStars openly offered internet poker to U.S. persons – that alone violated UIGEA and IGBA, as well as state and other laws. PokerStars’ entire U.S. business was unlawful. Removing one person – assuming he is removed – cannot cleanse that taint. (Of course, Isai – as far as anyone knows – remains a majority owner of the PokerStars companies, even if he has recused himself from management. That alone makes him relevant for purposes of suitability.)

PokerStars: The PokerStars response to the AGA brief highlights its satisfactory relationships with regulators around the globe who view PokerStars of appropriate character and moral turpitude, notwithstanding the Company’s prior legal troubles with the U.S. Department of Justice. And, lawyers supportive of PokerStars complain, “Enough is enough,” with a prosecution that never should have been brought.

Questions will continue

Not only the warring parties but also New Jersey’s legislators, and the New Jersey Statehouse have been swept into the fray. Pointed questions have been raised regarding their respective roles in the development of a conducive environment for PokerStars’ re-entry into the American market.

For the moment, however, all eyes are on the New Jersey Casino Control Commission as it is this body that will consider the standing of the AGA to participate in the Commission’s deliberations on PokerStars’ licensing suitability.

The AGA and individual members reportedly have previously used their lobbying clout to disrupt PokerStars’ ambitions in the U.S. Last month, the Nevada State Legislature put in a “bad actor clause” into its new online legislation. The clause was designed to keep off-shore online poker companies that featured U.S. facing-operations, after the enactment of the Unlawful Internet Gambling Enforcement Act (2006), out of town for years, if not permanently.

The protagonists in New Jersey soldier on. The AGA seeks to level the playing field with a fallback position of slowing down a purported imposter if it cannot exclude him. Meanwhile, PokerStars is continuing to showcase its well-oiled machine and flexing its moneyed muscles in continuing announcements of plans to grow mixed gaming fare worldwide, and the Commission is called upon to do a balancing act that silently takes into account the fragile economic situation in post Sandy New Jersey.

Despite the AGA’s ongoing efforts to convince the Casino Control Commission to deny Poker Stars a license in New Jersey, reliable sources in corridors of power in the state as well as the smart money all around are betting that PokerStars will emerge as a stunning victor — in time.

Over the past two weeks the American Gaming Association and PokerStars have sparred over the future of the online gaming company’s activities in Atlantic City. There is no end in sight for a battle that has AGA pressing the New Jersey Division of Gaming Enforcement (DGE) on behalf of its members into a long methodical examination of the merits of PokerStars’ entry into the United States casino market.

While the plot thickens and the legal issues unfold, more than a dozen lawyers are responding to my call for help to dissect in plain English what is happening. Lawyer sources for this article have intimate knowledge of the online and live casino industry. Many have represented one or more of the following: PokerStars, MGM, Caesars, other brick and mortar casinos and online gaming companies, and/or the AGA. They weigh in today on a few of the questions they have brought to the table for discussion.

Author’s disclosures: The  writer is a legal consultant but not a lawyer and therefore does not offer legal advice and does not express any legal conclusions in the matters presented in this article. This acknowledges without specific reference that the writer and/or EOLIS companies have had business dealings at one time or another with most of the businesses mentioned in this article and necessarily, have retained confidences provided in the context of those relationships.

Please also note: For the avoidance of doubt, readers are advised that no spokesperson for either PokerStars or the AGA was solicited for comment with regard to this article and none of the responses reflect authorized comment by either organization.

 

The questions and the summarized answers provided as a result of consulting with a wide variety of gaming law experts and white collar crime specialists follow:

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

AGA: They went lawyer shopping and adopted the stance they liked; a stance that suggests they deluded themselves or willfully ignored common sense.

PokerStars: They consulted the most erudite lawyers in the most respected firms in America and were thusly persuaded to their position that they were on the right side of the law and would ultimately win the legal battles.

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?

AGA: PokerStars engaged in activities that resulted in misidentification of deposits of player funds to avoid detection of their true purpose, knowing that these fabricated descriptors were violations of law. PokerStars later obtained cooperation in processing deposits, as such, by the payment of “special fees” to processors and/or floundering banks that would accept the deposits knowing their true purpose.

PokerStars: To date PokerStars does little to explain what is wrong with the DOJ’s charges and evidence except for statements that makes clear the Company was unable to do business it had a right to do, and therefore was left no alternative but to circumvent the system in order to do business that should not have been prohibited.

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?

AGA says that PokerStars engages in convenient truth-telling by quoting words out of context so as to create the erroneous impression that the DOJ harbors no ill will or continuing suspicion toward the operations of the Company.

PokerStars quotes specific statements made by the Government that support the Company’s position that the DOJ has  made itself clear as to PokerStars’ right to apply for a license. The Company suggests that whining casinos fear losses as a result of proving themselves weak in economic warfare not as a result of becoming victimized by criminal activity in competition.

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

AGA: While falling short of an accusation that PokerStars has violated its settlement with the Government, the Association raises collective eyebrows on PokerStars’ compliance with the spirit of that agreement, noting specific meetings in which Isai Scheinberg participated after the date he was supposed to shed management functions.

PokerStars: While making no specific references to this issue, PokerStars slams the AGA as making false and defamatory statements. Many insiders at PokerStars defend Scheinberg’s known sensitivity to accusations against his character, insisting that the man believes his own story and they do, too.

Note: the lawyers queried for this article agree virtually unanimously; this is a burning question on both sides.

5. Do the ongoing criminal charges against Isai Scheinberg reflect on the current suitability of the Company – particularly on its leadership which includes his son Mark Scheinberg?

This is perhaps the ultimate question. It is discussed with more passion than any other question raised by lawyers with deeply opposing views that reflect their varying relationshikps and the level of their knowledge about the companies with skin in the game. Their comments in response to this question will be discussed separately later in the week.

The summarized positions here are backed up in the next piece that will appear online at this website with quotes from lawyers that have been in the trenches, as the effort to legalize online gaming has progressed and prosecution of online gaming has continued in America over the past two years.

Multiple Protagonists

Meanwhile the protagonists soldier on. The AGA, represents brick and mortar casinos (as well as casino equipment and services providers) who ostensibly seek to level the playing field. The goal seems obvious; slow down the imposter if you cannot exclude him. Why? “Because the would be competitor is determined to play by his own rule book rather than rules of law,” says one frustrated casino executive—referring to a broad range of criminal charges brought by the U.S. government in U.S. v Scheinberg and its companion civil case against PokerStars. The Company took online bets from players in America after the enactment of the Unlawful Internet Gambling Enforcement Act (2006), in defiance of Government warnings that it was prohibited from doing so.

A Bit of Licensing History in New Jersey

Casino licenses are hardly the automatic end result of filing a license application  with the New Jersey authorities. Caesars was denied a permanent license in Atlantic City in the early 80’s until it divested itself of its chairman and vice-chairman, the brothers Clifford and Stuart Perlman. The Perlmans could not convince the regulators that they were not tainted by supposed connections to a well-known mobster who resided in Florida.

Note: Eolis International Group was retained by the Perlmans to select counsel for its bid to be heard before the U.S. Supreme Court after New Jersey refused to act favorably on their license application. As anticipated, certiori was denied.

Caesars’ licensing problems in New Jersey were resolved by the departure of the Perlmans. Caesars, which had been transformed from a private enterrpise into a public company by the Perlmans continued its broad scale casino and hotel operations  around the country, eventually being acquired by Harrahs  which took over the Caesars name. Caesars is widely regarded as the leader in the current AGA campaign to thwart PokerStars’ licensing efforts in New Jersey.

Also in the mix is MGM, another key brick and mortar casino and AGA member. MGM has had its own distasteful experience with New Jersey regulators in the past, but is hoping to mend fences in its current bid to hold on to its interest in the Borgata Hotel and Casino. Some three years ago, the MGM was forced to agree to sell its 50% interest in the Borgata Hotel and Casino after deciding not to abandon its plans for a joint venture with the daughter of a reputed Asian mobster in Macau.

As the March 24, 2013 deadline for MGM to sell its interest grew near, the Company decided to make a renewed bid for a permanent license. In February, the New Jersey Division of Gaming Enforcement began its consideration and has since granted the MGM the right to maintain its interest while the regulator entertains its latest request for a permanent license. The MGM is putting forward arguments that focus squarely on showing changes that demonstrate the Company’s much further distance from the Asian businessman that previously drew the ire of the New Jersey’s DGE.

PokerStars Enters Through Side Door

Now, along comes PokerStars, ready to purchase the floundering Atlantic Club in Atlantic City. Among the parties who seek licenses for PokerStars operations are Mark Sheinberg, son of Isai Sheinberg and CEO of PokerStars, and PokerStars General Counsel, Paul Telford, who has acted as chief consigliere to the Scheinbergs and PokerStars and companies behind their operations.

PokerStars is coming ever closer to setting down stakes on the Atlantic City boardwalk with a boatload of cash and promises to provide new jobs and preserve old ones at the Atlantic Club Casino. And, the Company reportedly has plenty more funds to underwrite a substantial initiative that will promote responsible gaming — as per the legislation amended by Governor Christie, before he signed up the Garden State for licensed and regulated online gaming operations.

Public Reaction to PokerStars Overtures to NJ Regulators

Nothing could be better, say civil libertarians, about the anticipated legal option for adults to play poker in pajamas at their computers, as well as a world of poker players jonesing for the chance to play one, two, or eight poker games at a time, online. By and large PokerStars’ operations are praised effusively at the online poker forums.

The Company has earned praise not only as the biggest and best cyberspace poker rooms in the industry, but also as the safest and most customer-minded gaming organization to serve the poker playing universe. The praise doesn’t stop there. PokerStars is revered for its integrity among players who point out that the Company has stepped up to the plate – every time – to prove unassailable integrity in timely payouts due to their customers.

Against the backdrop of a generally acknowledged, adoring customer base, and amid respect by its most demanding current regulators (PokerStars now operates real money games only outside of the United Staes), what could be more reasonable than for the Company to rebuild its proven brand in the United States? Nothing at all says PokerStars in  response to the recent AGA brief which pulls no punches in its accusations of pervasive criminal activities by the Company — over many years.

Morality Play

The U.S. Department of Justice and other law enforcement agency personnel in multiple states continue to insist that online poker companies have engaged in flagrantly unlawful activity in the U.S. since the UIGEA online anti gambling statute was put in place. Defendants that have come to terms with the Government in their criminal cases emanating from the April 15, 2011 indictment U.S. v Scheinberg have landed up in prison, and Full Tilt’s founder and most active manager, Ray Bitar is expected to do extensive time according to several lawyers who have read the tealeaves.

Two former prosecutors chide this reporter for pressing them to explain more fully the Government’s position, but they oblige: “the Government has nether reversed nor revised its position with regard to its claims of illegal activity on the part of PokerStars in its settlement agreement of civil charges against the Company.” Sure enough, they show me the legal papers that back them up!

Economic Warfare

Beyond the claims against PokerStars as made bythe DOJ in their cases, the commercial casino industry casino industry generally views the Company as having gained an unfair daunting edge over the past seven years while AGA members complied with the law. They complain that licensing PokerStars at this time would be tantamount to a reward for breaking the law.

The outrage over such a prospect is said to have come to a boil in recent weeks as AGA members became aware that PokerStars intended to apply for an Interim Casino Authorization in New Jersey. Such licensing they suggested would be at their expense.

Among casino operators queried, most were highly critical of PokerStars efforts to come into town through a side entry door of an ICA. And, few expressed an appetite to to accept their activities in America in recent years as under the threshold for a declaration of unsuitability to enter the marketplace.

The AGA Board voted unanimously or nearly unanimously (depending upon who you ask), to file the recent brief that strenuously objects to PokerStars joining the fraternity of commercial casinos that have been licensed in New Jersey. The AGA brief pounds the Company for a lack of good character, honesty, and integrity required to obtain such a license. The Association makes more pointed and damning claims, calling, describing the company as having been built on “chicanery, deceit” and pervasive criminal activity.

For its part, PokerStars exudes confidence in the DGE’s ability and obligation to decide the merits of a casino license for its Company (which it clearly believes it deserves). The Conmpany treats opposition to their becoming licensed in New jersey las outside shrill calls from would be competitors designed to exclude their most serious competition.

For the time being we are left to contemplate the future of PokerStars in the United States. Should the Company be left out in the cold or welcomed into the bosom of New Jersey’s heretofore super strict licensing authorities? Look for more analysis here in the coming days and in the next edition of Poker Player Newspaper.