August 06, 2012

PokerStars aiming for Nevada license next

Now PokerStars deal of $731 million with the US DOJ, PokerStars based in the Isle of Man has DOJ permission to re-enter the American market but only if it can obtain a license under a state or federal regulatory framework.

For years the company continued to operate in the country in the face of the Unlawful Internet Gambling Enforcement Act of 2006. The legislation convinced some of its competitors to exit U.S. market because of their stock listed standing, but PokerStars, along with Full Tilt Poker and Absolute Poker, stayed in and eventually met their day of reckoning with the feds in April 2011.

Nevada, with its heavy focus on the gaming industry, is leading the charge in the state-by-state legalization model. The Silver State’s gaming regulators have adopted rules for the industry and already licensed three companies to soon begin offering online poker to operators there. The first hand of real-money play under the supervision and taxation of Nevada could be dealt before 2013.

But can PokerStars find a way back to the US?

With its acquisition of former rival Full Tilt, PokerStars has added to its huge database of real-money players, some estimate PokerStars will have over 50% of the total online poker player market. and with that power could be attractive to Nevada, said State Assemblyman William Horne, sponsor of Nevada’s online gaming bill that was passed last summer. Horne is also a member of Nevada’s Gaming Policy Committee, which is headed by the governor.

However, for Horne, who worked extensively with PokerStars before Black Friday, the company has a “credibility issue to overcome.”

Before the federal indictments of the leaders of the major offshore poker sites operating in the U.S. were unsealed, PokerStars had been lobbying hard in Nevada to get real-money online poker authorized. Despite online gaming always being a vital issue for the state, the company was a driving force behind Assembly Bill 258.

An early version of the bill showed how badly PokerStars wanted a foothold in Nevada. The company was willing to pay Nevada four percent of the rake from the rest of the world.

PokerStars’ involvement with Nevada went so far as to land a “strategic partnership” with Wynn Resorts, one of Nevada’s dominant casino companies. The deal disintegrated after PokerStars owner Isai Scheinberg was accused of money laundering, bank fraud and illegal gambling in New York. Scheinberg still has criminal charges against him and could face up to 65 years in jail, if convicted.

According to Tuesday’s DOJ press release, Scheinberg “shall not serve in any management or director role at PokerStars.” However, that could be lifted upon resolution of his criminal case.

Horne said that he doesn’t think PokerStars was “candid” or “forthcoming” during its relationship with state lawmakers. He said that the company probably had an idea that a federal investigation was ongoing at the time.

When asked if PokerStars has burned any bridges in Nevada, Horne said that isn’t the case. He said that he has confidence in Nevada’s gaming regulators to vet each company that applies to do online poker business in the state on a case-by-case basis. PokerStars “might be deserving” of a license, he said.

Gaming Control Board Chairman Mark Lipparelli told the Las Vegas Review-Journal Tuesday that he wouldn’t comment on prospective applicants. He also told the paper that even though “perfection” can’t be expected out of applicants, he still believes many will fail in attempting to get approval in Nevada.

At a recent Gaming Policy Committee meeting, Lipparelli defended Nevada’s position by saying that some large foreign online gaming companies have looked at the state’s regulatory standards and decided they couldn’t make the cut.

It remains to be seen if online poker giant PokerStars will decide to apply, but also who will PokerStars join forces with to work in the US should they apply. Remember all overseas companies need a US based gaming company to work with.

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