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UIGEA May Haunt PokerStars for Years to Come

PokerStars’ attempt to enter the U.S. online poker market by way of owning the Atlantic Club in New Jersey was nullified by failing to obtain a casino license by the April 26 date specified in the acquisition agreement.

In legal documents filed by the Atlantic Club in support of its right to terminate the contract, the casino brought up the fact that PokerStars may not even be granted a casino operating license by New Jersey gaming officials after the 90-day investigation period concludes. The main reason why PokerStars’ suitability is questioned is due to their apparent flouting of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006.

The American Gaming Association (AGA) and others have attributed PokerStars’ success in the online poker market to the fact that the site was able to build a strong customer base by remaining in the U.S. market post-UIGEA. Since that time, PokerStars has increased its share to more than 50% of the entire worldwide market.

The AGA’s claims are at least partially true. But PokerStars has done several things correctly in order to pull away from the rest of the pack. An award-winning team of customer service representatives, a wide array of available cash games, non-stop tournament action with the largest prize pools, and a VIP program that favors multi-table grinders with generous cashback incentives, to name a few.

Keep in mind also that PokerStars bailed out millions of players by purchasing Full Tilt Poker last year. Despite all those positives, the one area focused on by many continues to be violating the UIGEA. That is the central reason why bad actor provisions are being considered by states contemplating online poker legislation.

The PokerStars name is tarnished and any attempt to infiltrate the U.S. market will require it to defend its actions. Some may argue that the bad actor rap is unjustified. PokerStars CEO Mark Scheinberg recently told the Wall Street Journal that there is a “gross misrepresentation of our conduct and the values with which we run our business.”

Scheinberg added that the company feels “obliged to correct” the perceived bad boy image that blemishes what may have otherwise been a well-respected name throughout the industry. As it stands now, many gaming companies are rooting against PokerStars. It would make much better business sense for them to keep the industry leader on the sidelines while regulation opens up slowly throughout the U.S.

Let’s remember, though, that PokerStars admitted no guilt in settling the Black Friday allegations. Also, the negotiations that concluded with the assets of Full Tilt being acquired from the U.S. Department of Justice by PokerStars included somewhat of a DoJ blessing that allows PokerStars to apply for licensure in the U.S. marketplace. That time is now, but the UIGEA violation continues to haunt PokerStars, which may be the case for years to come.

At least five years in Nevada, according to the bad actor clause in the statute. That seems justifiable to many, including Mark Lipparelli, the previous chairman of the Nevada Gaming Control Board. Lipparelli stated that “you may as well not have a licensing process” if companies such as PokerStars are granted a license.

Which leads one to wonder, what can PokerStars do to get rid of the blemish that stains its name? Well, it seems the only out is to tackle the charges head on in a court of law. Arguing that poker requires skill instead of chance and that its host servers are located in countries in which the site is fully licensed may be a defense against the vagueness found in the UIGEA statute.

If those matters are never addressed, PokerStars will continue to be regarded by many as a company whose business practices are somewhat less than honorable. And that’s really a shame considering some of the good things they do that include receiving recognition for being a wonderful place to work and counting a large number of players among its faithful. Until that UIGEA stigma is removed, PokerStars may continue to be viewed as a company that gained an advantage by disregarding federal laws.

 

 

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Charles Rettmuller

Charles has been an avid poker player for a number of years, both live and online. He holds a degree in journalism and previously worked as a reporter for a Chicago-based newspaper. Charles joined the PokerUpdate team in early 2012 and writes daily news articles for the site.

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