PokerStars Dealt a Crushing Blow; NJ DGE Suspends License Review

No PokerStars in NJ for now says DGE

In breaking news first reported by Nathan Vardi of Forbes.com on Wednesday, the New Jersey Division of Gambling Enforcement has decided to suspend their review of PokerStars New Jersey online gambling license application for two years, unless significant changes are made within the company.

PokerStars out in New Jersey?

The two-year suspension all but dashes PokerStars hopes of being a major player in the burgeoning US online poker market, as New Jersey was seen as the site’s best chance, with the most sympathetic lawmakers and regulators.

The suspension isn’t ironclad though; the NJ DGE did leave themselves enough wiggle room to cut the suspension short if, “significantly changed circumstances are demonstrated…”

According to a statement made by the NJ DGE:

“The Division of Gaming Enforcement has determined that the application of Rational Services Limited (PokerStars) casino service industry licensure (CSIE) will be held in a suspended status for a period of two years.”

The statement went on to cite the main reason (not the only reason, just the main reason) as:

“… the unresolved federal indictment against Isai Scheinberg for the alleged violation of federal gambling statutes […] and the involvement of certain PokerStars executives with Internet gaming operations in the United States following the enactment of UIGEA,”

Eric Hollreiser, PokerStars Head of Corporate Communications was quoted by PokerNews.com as saying:

“We are disappointed that the NJ 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.”

Isai Scheinberg and PokerStars

When it came to the holdup surrounding PokerStars New Jersey iGaming license the elephant in the room all along has been PokerStars founder Isai Scheinberg.

Scheinberg is still under indictment by the Department of Justice for his role at PokerStars from 2006-2011, which the DOJ alleges was operating illegally in the United States right up until the site was shutdown on April 15, 2011.

Scheinberg has supposedly taken a reduced role within the company (which was a stipulation in the settlement PokerStars reached with the DOJ) but it would appear that his new gig at PokerStars is still too hands-on for the NJ DGE’s liking, and according to court documents filed by the Atlantic Club after a failed purchase attempt by PokerStars, Scheinberg was an active participant in the negotiations.

Unless the stated reason by the DGE is not the entire story, one would assume that the DGE requested Isai Scheinberg discontinue whatever capacity he is currently serving in.

Why he would not placate the DGE at this critical juncture in online poker history, with his company seemingly so close to an online gambling license in the US, is hard to comprehend.

New Jersey doesn’t need PokerStars

As the US industry started to get off the ground there was a lot of speculation if the industry would ever be able to reclaim any of its past glory without a heavy hitter like PokerStars leading the way.

Well, as we have seen in New Jersey, it doesn’t appear that the US industry needs PokerStars as much as people initially thought, and the New Jersey online poker rooms that have successfully launched may have made the DGE’s life a whole lot easier when it comes to dealing with the highly contentious issue over PokerStars suitability.

As I highlighted above, Isai Scheinberg was cited as the primary reason in the DGE’s statement; he wasn’t the only; which leads me to wonder if the decision to suspend PokerStars application was at all based on the other providers’ early success in New Jersey? If Party Poker, 888, and company had fallen flat, would the DGE have been more willing to overlook PokerStars warts?

 

Steve Ruddock

Steve Ruddock

Steve is a veteran online poker writer with thousands of news articles to his credit. His primary focus is the burgeoning market for regulated online poker in the United States, including New Jersey. Follow Steve on Google+.

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