Caesars v. PokerStars: A Battle for Online Poker

08 March 2013

Pokerstars

Forget the poker faces, the battle of online gambling is live on the felt and cards are hitting the table.

Only days old, the New Jersey online gambling legislation is still warm from the presses, and already it’s the source of contention between the US casino industry and foreign interests.

Some say it started with the 26-page brief filed with the New Jersey Casino Control Commission and Division of Enforcement by lawyers representing the American Gaming Association.

This brief urges the NJCCC to oppose PokerStars’ petition for interim casino authorization, stating that PokerStars “was operated as a criminal enterprise for many years.” It goes on to say that the Rational Group, parent company to PokerStars, “cannot demonstrate the good character, integrity, and honesty required by New Jersey law.”

Strong words from an organization that has never before sought to intervene in a licensing proceeding. There was widespread speculation from news forums and poker sites that the move was not as altruistic as it may first seem. In fact, NJ state Senator Jim Whelan was rather outspoken of the brief, claiming the AGA is “motivated by greed. They want to keep foreign investors out.”

Senator Whelan also alleged that the AGA is the ax being wielded by Caesar’s Entertainment Corporation. As the largest player in Atlantic City and owner of Harrah’s, Showboat, Caesars Atlantic City, Bally’s Atlantic City, and the World Series of Poker brand, Caesars would have the most to lose with increased competition.

While Caesar’s may be the big fish in Atlantic City, PokerStars is a fairly big whale in the world. And this battle is hardly over.

A spokesman for the Rational Group responded to the brief in an email, “These are matters for expert regulators to determine, not self-interested partisans picking a public fight,” he wrote. “Poker Stars is one of the largest and most respected internet gaming companies because we work closely with regulators and are in good standing with the governments around the world.”

And the US, as it turns out, is one of those governments. After the fiasco of Black Friday, PokerStars agreed to pay $547 million to the US Justice Department as well as $184 million to poker players as a settlement to its case. PokerStars admitted neither guilt or wrongdoing with regards to the charges of money laundering, bank fraud, and illegal gambling.

While the AGA brief marinates at both the New Jersey Casino Control Commission and the Division of Gaming Enforcement, the Rational Group’s application for an Interim Casino Authorization is currently being reviewed by the Division of Gaming Enforcement. If approved, it will move to the NJCCC, where the decision will impact whether or not PokerStars proceeds with the purchase of the struggling Atlantic Club Casino Hotel.