Bloomberg News

Online’s PokerStars Opens Card Rooms as U.S. Fight Looms

March 13, 2013

PokerStars, the world’s largest online poker site, is opening card rooms in casinos to promote its brand, even as land-based operators in the U.S. try to thwart its expansion on their turf.

The company, owned by closely held Rational Group Ltd. based in Isle of Man, opened a PokerStars card room in London’s Hippodrome Casino this month after buying a minority interest in the property, according to Eric Hollreiser, a company spokesman. The company also has agreements for rooms in Spain and Macau.

“There are people who play poker in brick-and-mortar casinos, who also may play online,” said Randall Fine, managing director of the Fine Point Group, a Las Vegas-based gambling consultant. “It makes sense that they’ve developed a very successful online brand to promote it elsewhere.”

PokerStars, which is using the cardrooms to attract new customers, is battling a U.S. casino trade group that opposes its purchase of the Atlantic Club Casino Hotel in New Jersey. Ownership would give the company a foothold in the emerging U.S. online gambling market and challenge similar efforts by the largest operators, including Caesars Entertainment Corp. (CZR:US)

Letting the Washington-based American Gaming Association participate in PokerStars’ New Jersey licensing hearing would be “destructively anticompetitive,” Rational Group said in a March 10 letter to state regulators. The AGA’s members include Caesars, Atlantic City’s top operator, Boyd Gaming Corp. (BYD:US) and MGM Resorts International. (MGM:US)

PokerStars came to prominence in part due to its sponsorship of players at the World Series of Poker in the U.S. That business is owned by Caesars.

Thousands Online

PokerStars, founded in 2001, had more than 177,847 players at its main website at one point yesterday, compared with 15,171 for PartyPoker, owned by Gibraltar-based Bwin.Party Digital Entertainment Plc (BPTY), according to PokerScout.com, a site that provides industry data. Bwin has partnered with Zynga Inc. (ZNGA:US) to offer real-money betting in the U.K.

New Jersey Governor Chris Christie last month signed legislation legalizing online gambling in the state, restricting the business to local casino owners. H2 Gambling Capital, a U.K.-based researcher, estimates U.S. online gambling could reach $7.4 billion annually by 2017.

Last year, PokerStars reached a $731 million settlement with the U.S. Justice Department over allegations of money- laundering and fraud related to its now-closed real-money online poker service in the U.S.

The gaming association cited that settlement in a filing with New Jersey regulators this month opposing the Atlantic City casino purchase.

Not Friends

“It comes down to money,” said I. Nelson Rose, a professor of gaming studies at Whittier Law School in Costa Mesa, California. “If some of the big boys want to partner with them, then it’s OK. If they don’t want the competition, then it’s not OK.”

PokerStars operates the European Poker Tour, which holds tournaments in casinos throughout the continent. Last month, the company opened a poker room at the Casino Gran Madrid in Spain with 20 tables focused on tournaments. It also announced an agreement to open one in Melco Crown Entertainment Ltd. (MPEL:US)’s City of Dreams casino in Macau.

“The PokerStars online brand drives more traffic to live poker events than any other,” Danny McDonagh, director of live operations in Asia for the company, said in a statement.

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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Companies Mentioned

  • CZR
    (Caesars Entertainment Corp)
    • $15.92 USD
    • -0.08
    • -0.5%
  • BYD
    (Boyd Gaming Corp)
    • $10.1 USD
    • -0.90
    • -8.91%
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