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POKERSTARS AND CAESARS: WHAT IS THE SCORE?

Poker
By Wendeen H. Eolis
Poker Player Newspaper
March 12, 2013

A complicated relationship between Rational Group (PokerStars) and Caesars Entertainment has begun to reveal itself in earnest in recent weeks with an eclectic crowd of movers and shakers surrounding the players at the top of their respective pyramids.

The two companies, with assistance from empowered supporters, have been known to deliver understated slaps back and forth over the years, but lately the protagonists are exchanging more powerful blows.

Members of the Scheinberg family and top executives in the corporate empire of Caesars Entertainment are in the mix. So are the likes of American Gaming Association president, Frank Fahrenkopf, who will soon take his leave from his longtime position there.

The cast of characters in recent machinations between the two companies has also included Scott Wilson, a business consultant/professional gambler with powerful connections. He was the spark that ignited a telephone call between Caesars and PokerStars — the call that was heard around the world last week in a report by Nathan Vardi in Forbes  Magazine.

Mark Scheinberg and Mitch Garber are the key players in the sandbox

Poker Player Newspaper has learned the identities of the “two high level officials” that were referenced without attribution in the Forbes article. They were Mitch Garber, CEO of Caesars Interactive and Mark Scheinberg, CEO of PokerStars.

According to multiple sources knowledgeable about the discussion, Garber and Sheinberg had a short, casual conversation that centered on Caesars’ potential interest in selling the Rio All Suites Hotel and Casino and the World Series of Poker. The same sources also emphasize that the conversation was opened and closed in the space of a few minutes. One lawyer who knows both men said, “I doubt it rose to the level of a serious fishing expedition on either side. The companies don’t trust each other.” PokerStars noted and then brushed off the conversation by grandstanding its disinterest. Caesars has remained mute, apparently concluding that its public relations machine should lay low and allow silence to be golden for the moment.

But the overall plot thickens as the two companies contemplate their respective strategic plans — each seeking to become the most dominant force in the anticipated resurgence of online gaming in America.

Nevada legislation frustrates PokerStars’ bid to thrive in America

On February 21st, Nevada Governor Brian Sandoval signed a new piece of legislation, the Interactive Gaming Act. The new state law contains a clause that presumes unsuitability of online poker companies that accepted bets from US facing sites after enactment of the Unlawful Internet Gambling Enforcement Act of 2006. The law seems pointedly designed to freeze PokerStars out of the online gaming world in Nevada — for the foreseeable future. Caesars Entertainment has been widely rumored as the leading force supporting that position.

New Jersey Department of Gaming Enforcement is now on deck

Meanwhile the American Gaming Association has since fired on PokerStars’ aspirations in New Jersey. Last week the AGA submitted a legal brief to the State’s Division of Gaming Enforcement that clearly intended to thwart if not fully dislodge the Company’s efforts to gain a foothold in the Garden State.

The Association which has most notably represented the interests of brick and mortar casinos in Nevada, and which is known to have especially close ties to Caesars Entertainment, blasted PokerStars in its 26 page brief, declaring  the online poker company as unsuitable for a gaming license. The AGA spelled out its unprecedented opposition against a gaming license application with inflammatory accusations of “chicanery” and pervasive criminal activity for years” leveled at PokerStars.

The phone call

The charges were met with a swift barrage of missiles launched by PokerStars in the direction of the C-Suite of Caesars Entertainment. PokerStars publicly revealed the phone call between the two companies, leaving unsaid the specific participation of either Mark Scheinberg or Mitch Garber.  PokerStars communications director Eric Hollreiser followed up the opening salvo with a thinly veiled suggestion of impropriety during that conversation on the part of the Caesars executive.

Hollreiser cleverly diverted attention from the scathing AGA brief, but the accusations raised in the brief have yet to be met head on by PokerStars.  Similarly the wicked public relations bruising that PokerStars administered to Caesars thus far has been left to fade on its own.

Caesars has demurred from a public response on its reported potential interest in selling the World Series of Poker. And, it hasn’t said a peep in response to the statement by PokerStars that insinuated Caesars had more or less suggested the online company should cozy up to the commercial live casino giant if it hoped to obtain a Nevada gaming license sooner, rather than later.

PPN takes names and reports on the back story

Tomorrow 5PM PDT: the AGA v Poker Stars–Who Scores?  pokerplayernewspaper.com