PokerStars’ carefully orchestrated sale to Amaya Gaming for $4.9 billion looks like it might well pay off for the world’s biggest poker site. The ink was still running down the page on that $4.9 billion contract when New Jersey gaming officials announced that they had met with representatives from Amaya, and this week they told the Associated Press that they were optimistic that PokerStars may be able to join the New Jersey market as early as this fall.
Documents in the Loop
Officials from the New Jersey Division of Gaming Enforcement (DGE), which regulates and licenses gambling in the state, said that Amaya has already begun submitting the necessary documents to New Jersey regulators to apply for a state license.
In the coming months, the division will be scrutinizing the post-acquisition corporate structure of the company, as well as the executive and management personnel and the software platform itself to make sure it’s in line with New Jersey regulatory standards.
PokerStars has long held designs on the New Jersey market. In 2013, anticipating legalization and regulation in the state, its parent company, the Rational Group, attempted to buy the ailing Atlantic Club casino in Atlantic City, in order to secure the acquisition of a state gaming license, and from there, it hoped, a license to operate online poker after regulation. However, the deal fell through, and several months later the Atlantic Club was forced to file for bankruptcy and lay off its 1,600 staff. It was sold in December for $23.4 million, to be stripped for parts.
The reason given for the deal’s collapse was the concerns over outstanding federal indictments on the company’s father-son founders, Isai and Mark Scheinberg. The indictments related to PokerStars’ failure to cease offering gambling to American citizens after the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 had made it illegal to do so. After Black Friday, PokerStars paid a $547 million fine to the Department of Justice, which it hoped would absolve the Scheinbergs, but the issue flared up again when PokerStars attempted to apply for a license in the run up to legalization.
On December 11, 2013, New Jersey’s Division of Gaming Enforcement (DGE) announced it would suspend its review of ‘Stars online gaming license for two years. In a statement that may have inspired the acquisition strategy, the DGE said:
“The Division (within the two-year period) may consider a request for relief to reactivate the application if significantly changed circumstances are demonstrated…the Division’s investigation of PokerStars and its affiliated entities and associated individuals will be resumed to assess suitability.”
Having removed themselves from the equation by selling to Amaya, the Scheinbergs may at last witness the company they built return to the US.
However, at least in the case of New Jersey, it will be as a software provider, not an operator, much in the way that 888 Holdings provides software to Caesars and the WSOP.com brand. PokerStars has a deal in place with Resorts World, which owns the Resorts Casino Hotel in Atlantic City. That relationship will remain intact, despite the acquisition, and Resorts has said it intends to use both the PokerStars and FullTilt brand names should the outfit be given the opportunity to do so.
“We welcomed the recent announcement by Amaya Gaming Group, Inc of its plans to acquire Rational which we expect will move the regulatory approval process forward,” said Resorts Casino Hotel owner Morris Bailey. “PokerStars is the leading world-wide brand in online gaming and we are looking forward to our future with them in New Jersey.”