Laurence Tribe, Harvard Law professor, has begun attacking attempts by PokerStars‟
rivals to label the company a “bad actor”, saying such language is unconstitutional.
The company‟s approach may be working – PokerStars last week reopened licensing
negotiations with New Jersey gambling regulators. However, being shut out of
California, widely considered to be the potential crown jewel of the US online gaming
market, would render it extremely difficult to enter states that adopt internet poker
in the future.
“What we talk about is the domino effect – that [states] by and large copy each
other,” said one state gaming regulator. “That means if you get in trouble in one
jurisdiction, you have to explain it in another.”
PokerStars is the world‟s largest online poker provider, with more than 90m players
and 11 operating licences worldwide. The company was exiled from the US after a
2011 Justice Department crackdown on offshore online poker operators.
In 2012 it settled charges of bank fraud, money laundering and other violations of
gambling regulations for $731m without admitting wrongdoing. The sum included
the acquisition of Full Tilt, PokerStars‟ main competitor, which was also a subject of
While the company maintains that it did not do anything wrong, two of its
executives, including founder Isai Scheinberg, are still under indictment in the US,
though Mr Scheinberg has denied the charges.
Under the umbrella of Amaya Gaming, PokerStars is confident it will be able to heal
its old wounds.
“The agreement with Amaya will strengthen our business coalition in California,”
said PokerStars spokesman Eric Hollreiser, in reference to an agreement it forged
with one of the state‟s major gaming tribes this spring.
The first test will come in New Jersey, which suspended PokerStars‟ licence
application last year over the lingering Scheinberg indictment.
New Jersey “will be one of the first in the United States to take a bite out of the
suitability apple for this new entity. Certainly their view will be an important
determinant of the ability of this new entity to participate in regulated gaming in the
US,” said Richard Schuetz, a commissioner on the California Gambling Control
While New Jersey will be the litmus test, the prize is still California and its
population of 38m. But for competitive reasons, 13 of the state‟s 14 gaming tribes are
determined to keep PokerStars out via the “bad actor” clause embedded in the
legislation. Unlike in other states, Indian tribes in California maintain exclusive
control over gambling.
“It would be hard for anyone to say that this is targeted to anyone else besides one
company,” said John Pappas, executive director of the Poker Players Alliance. “They
have singled out PokerStars as the „bad actor‟.”
While PokerStars blasted the language as protectionist and unconstitutional, the
tribes argue that they must protect their turf or risk losing one of their few means of
The tribes “are worried someone is going to come in and cut their throats during the
night”, said Victor Rocha, a veteran of Indian gaming politics in California. “They
have always been very protective of gaming because it is the only thing that has
allowed them to thrive.”