PokerStars Shut-Out of New US Online Gaming Market

The world’s most popular online poker company has suffered a further setback in its attempts to access the lucrative new online gaming market beginning to open up in the USA. Until now online gambling has been illegal in the US, but several states are now opening up to online gaming for real money and issuing licenses. The largest of these States, New Jersey, has however suspended PokerStars’ application for a license for the next two years. Regulator, The New Jersey Division of Gaming Enforcement suspended to review of the application stating “the Division, within that period, may consider a request for relief to reactivate the application if significantly changed circumstances are demonstrated at which time the Division’s investigation of PokerStars and its affiliated entities and associated individuals will be resumed to assess suitability.”

The regulator’s beef with PokerStars is related to a US-facing poker site the company used to run which was shut down by prosecutors in 2011 for alleged breaches of the Unlawful Internet Gambling Enforcement Act (UIGEA), which prevents online gambling companies from targeting or accepting US citizens as clients. The company’s founder Isai Sheinberg was indicted as a result of that prosecution but has not come to the US to face charges. Sheinberg has since officially stepped down from having any official, direct management role with the company in an apparent effort to prevent his own issues with US authorities from impacting on PokerStars’ attempts to enter the newly regulated market opportunities Stateside. However, his continued ‘advisory’, role with the company is clearly viewed by the regulators as a sign of continued direct involvement despite official protestations to the contrary.

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

Although the New Jersey decision does not mean PokerStars will face a similar verdict from regulators in other states, the worry is clearly that this sets a precedent that others will follow. It is also the largest potential market in the US, so obviously a major blow. Company spokesman Eric Hollreiser stated in response to the decision:

We are disappointed that the N.J. Division of Gaming Enforcement has suspended the review of our application at this time.We note that the DGE will resume the review of our application if our circumstances change. We will remain in open dialogue with the DGE and will update them on changes in our situation as they occur.”