The AGA Attempts to Flex Their Muscles in New Jersey, PokerStars Pushes Back

Yesterday, the American Gaming Association (AGA), filed a petition with the New Jersey Department of Gaming Enforcement (DGE) to ask that New Jersey deny a casino license to PokerStars. PokerStars is in the process of acquiring the Atlantic Club Casino in Atlantic City, and filed their application for the appropriate interim casino authorization license in late December.

The AGA also filed a brief summarizing their position that they have standing in the case, to be heard via the aforementioned petition and, if standing is granted, they asked for leave to take part in oral or written arguments following the hearing in Atlantic City to determine if the license for PokerStars will be granted.

In the AGA’s brief in support of its petition to participate in the matter, they claim to represent the interest of 62 members with interests relating to the commercial casino industry, including casino companies, gaming equipment manufacturers, financial services companies, professional services firms, suppliers and vendors, state gaming associations, publications and labor unions.

Of particular note, the brief asserts that the AGA has “consistently favored the preservation of suitability based licensing criteria for the commercial casino industry and recognized the necessity of insuring that only individuals and entities of good reputation and integrity are licensed”.    

Further, the AGA claims that the approval of a PokerStars license in New Jersey will serve to “frustrate rather than further” the principles that the AGA promotes.

Earlier today, an article appeared in Forbes.com in which Eric Hollreiser, Head of Corporate Communications for the Rational Group, owner of PokerStars, offered a statement that just a few short weeks ago, Caesars Entertainment, (said to be one of the major pushers behind the AGA action) approached PokerStars offering to sell them the Rio Casino in Las Vegas and the WSOP brand.  The brand of course, would presumably be the name under which online gaming is provided by CET in jurisdictions where it is legalized and they are licensed.  According to the article, PokerStars declined to move forward with purchase discussions as they were not interested in pursuing additional brick and mortar properties at the time.

It was shortly thereafter that Nevada Governor Sandoval, signed a bill into law legalizing online gaming in Nevada.  The Governor and members of the Nevada congress touted the signing as showing that Nevada remains leader of the pack, enacting their legislation before New Jersey. The New Jersey Senate and Assembly passed their bill just days later, with Governor Christie signing within moments.  Nevada had previously passed legislation in 2011, but their law required that federal legislation be passed before they go live.  That never happened, New Jersey passed their bill with no such caveats, and Nevada was forced to amend their bill so they could proceed at least on an intrastate basis.  This new bill includes a “bad actors” clause, prohibiting gaming companies that were active online in the United States after December 2006 to have a 5 year cooling off period before they could be licensed in Nevada. This was clearly a way to close PokerStars out of the Nevada intrastate online market (PokerStars did operate in the US market post December 2006, along with others).  Sources say that the “tainted assets” language in the Nevada bill predates the reported offer for PokerStars to buy the Rio/WSOP, so it still remains unclear what the motivation for such an offer was and how Caesars expected to capitalize on it, had those discussions progressed.

As to the AGA’s petition, Hollreiser of PokerStars offered the following statement:

Many of the AGA’s charges are false and defamatory.  No court has found PokerStars or the four named PokerStars executives guilty of any offenses and neither they nor the companies face any criminal charges.  Furthermore, the settlement with the DOJ includes no admission of any wrongdoing.

The Department of Justice has said PokerStars is suitable to apply for a license in the U.S. and saw fit to sell us the assets of our largest competitor and entrust us to compensate their customers outside of the U.S.

We will continue to work with authorities including the NJ regulators and other interested state regulators to discuss our qualifications and allow them to comment on what they find.

PokerStars is one of the world’s largest and most respected internet gaming companies because we work closely with regulators and are in good standing with governments around the world, holding licenses in France, Germany, Italy, Spain, Denmark, Estonia, Belgium, Malta and Isle of Man.  We will continue to work positively with regulators in New Jersey and elsewhere whenever they review our qualifications.

Perhaps it’s no coincidence that AGA member Caesars Entertainment approached PokerStars in early February and offered to sell us certain assets, such as the Rio Casino in Las Vegas and the World Series of Poker.  Caesars suggested that this acquisition would give us a better relationship with Caesars and would help PokerStars gain a license in Nevada.  PokerStars declined the offer because we had no plans to acquire another casino in the near term.

Within weeks Nevada legislators inserted language in their online poker bill clearly aimed at preventing PokerStars from participating and the AGA came out with these specious claims.

Diamond Flush Poker will have more on this story in the coming days.

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