Bloomberg News

Casino Industry Opposes PokerStars’ Bid for New Jersey License

March 05, 2013

The U.S. casino industry is opposing an effort by PokerStars, the biggest Internet gambling company, to buy an Atlantic City property as New Jersey prepares for online betting.

The American Gaming Association, which has never participated in a licensing proceeding, cited federal charges settled by PokerStars and parent Rational Group Ltd. in the petition filed yesterday with state casino regulators. Holly Wetzel, a spokeswoman, confirmed the group opposes the effort to buy the Atlantic Club Casino Hotel.

New Jersey’s new online gambling law limits online betting to owners of casinos in the state. The group’s complaint, which focused on PokerStars’ prosecution last year for bank fraud and money laundering, sends a signal that established casinos will challenge would-be competitors.

“These are matters for expert regulators to determine, not self-interested partisans picking a public fight,” Eric Hollreiser, a spokesman for PokerStars, said in an e-mail. “We will continue to work positively with regulators in New Jersey and elsewhere whenever they review our qualifications.”

Hollreiser said the company, based in Isle of Man, U.K., holds licenses in France, Germany and other countries and was allowed to purchase the assets of its largest competitor in a settlement with the U.S. Department of Justice last year.

Rational Group, PokerStars’ parent, agreed in January to buy the Atlantic Club, one of New Jersey’s 12 casinos in Atlantic City. The deal must be approved by the state’s Division of Gaming Enforcement and Casino Control Commission.

Online Gambling

Online gambling laws passed in New Jersey, Nevada and Delaware favor incumbent operators.

New Jersey’s law, signed by Governor Chris Christie on Feb. 26, lets existing operators offer all current games. Their hardware must be located in Atlantic City. Nevada’s law, signed on Feb. 21, lets land-based casino operators offer online poker only, according to Greg Gemignani, a Las Vegas attorney specializing in gaming law.

In Delaware, the state lottery will run the business with three horse tracks and is seeking bids from technology partners.

PokerStars reached an agreement with the U.S. Justice Department in July 2012, settling charges of fraud and money- laundering related to the company’s offering of online poker in this country after Congress banned such play in 2006.

The company, one of three targeted by the government, agreed to forfeit $547 million to reimburse players whose funds had been frozen. As part of the settlement, PokerStars acquired its competitor, Full Tilt Poker.

With U.S. banks and credit-card issuers prohibited from processing their payments, the poker companies allegedly used fraudulent methods to circumvent federal law and deceive the financial institutions into facilitating the transactions, the government said.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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