PokerStars Denied New Jersey Online Gambling License

In late breaking news on Wednesday, leading online poker site, PokerStars, did not begin offering online poker games to residents of New Jersey like other poker sites started doing on November 26, and it won’t be for some time at least, as it has been denied an online gambling license by New Jersey gaming regulators to operate in the regulated New Jersey online poker market for two years pending changes to the current circumstances.

A statement from the New Jersey Division of Gaming Enforcement (NJDGE) went on to explain the application “will be held in a suspended status for the two-year period”, but the statement also made it clear that it “may consider a request for relief to reactivate the application if significantly changed circumstances are demonstrated at which time the Division’s investigation of PokerStars and its affiliated entities and associated individuals will be resumed to assess suitability.”

In the statement, the NJDGE went on to explain the reason for the denied application is the status of PokerStars’ founder Isai Scheinberg who has been indicted on serious criminal charges and remains a fugitive from justice. Scheinberg is not a US-citizen and has avoided stepping foot on US soil. The NJDGE also stated the decision was also based PokerStars’ “internet gaming operations in the United States following the enactment of UIGEA.”

PokerStars continued to operate in the United States post-UIGEA and was one of the three sites that was indicted on a day that is now referred to as “Black Friday” in 2011. A few weeks later, the company settled with the U.S. DoJ for $731 million dollars even though it didn’t admit to any wrongdoing. It since acquired Full Tilt Poker so that it could reopen to non-US players.

The DOJ said that it had permission to re-enter the U.S. market if regulation is to occur, just as long as it was granted an online gambling license by the state/jurisdiction it was to conduct business in. PokerStars also said it will remain in contact with the NJDGE to notify them of any changed conditions.

Being denied a New Jersey license by NJ regulators until the end of 2015 at the earliest will definitely be a bit of a setback for PokerStars’ efforts to return to the US market, especially considering NJ is the largest U.S. state to date to regulate online poker, with analysts estimating that New Jersey’s first year of regulated online gambling will generate around $300 million.

PokerStars original plans for the New Jersey market was to be granted a license by buying the Atlantic Club Casino Hotel, however that particular deal fell through. The company also developed a strategic partnership with Wynn Resorts to pursue the Nevada online poker market. Just before this deal was finalized, it was reported that meetings between Wynn and Scheinberg took place on a yacht in the Mediterranean Sea, which became the foundation for the deal, but the deal that was brokered also fell through after the Black Friday fiasco.

It is not all doom and gloom for PokerStars though. They are still by far the largest online poker site in the world, and with plenty of other U.S. states likely to follow Nevada, Delaware, and New Jersey, in offering regulated online gambling in 2014. So they still have plenty of opportunities to gain entry back into the US poker market. California has a huge poker playing population and rumors suggest that they will have regulated online poker in the not too distant future, so PokerStars will no doubt have their eyes firmly set on California if and when that occurs.