Internet poker giants PokerStars has had its New Jersey e-Gaming license application denied by the state's Division of Gaming Enforcement, citing an unresolved federal indictment regarding the group's founder Isai Scheinberg.
In addition to the denial, PokerStars has had its application frozen for two years, meaning that the poker firm will not be able to make any progress in the Garden State until the freeze is lifted.
The group had planned to operate online poker and casino games through a partnership with Resorts Casino, although it now appears that those plans will not come to fruition.
Scheinberg founded PokerStars, and was the head of the firm when he was indicted during the US anti-online poker actions in April 2011, which has commonly become known as Black Friday. He has since stepped down from heading the company, allowing his son to take on his former role.
In a statement, the New Jersey Division of Gaming Enforcement addressed the PokerStars incident, noting that there is an unresolved indictment against Scheinberg for “…violation of federal gambling statutes, namely, the Illegal Gambling Business Act and the Unlawful Internet Gambling Enforcement Act (UIGEA), and the involvement of certain PokerStars executives with Internet gaming operations in the United States following the enactment of UIGEA."
It does appear that that the two year application freeze can be lifted if Scheinberg leaves PokerStars. The DGE's statement read: “The division … 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.”
Eric Hollreiser, PokerStars Communications Chief, ended up giving a statement in regards to the denial. Hollreiser expressed disappointment, noting: “We are disappointed that the New Jersey Division of Gaming Enforcement has suspended the review of our application at this time. We note that the DGE will resume the review of our application if our circumstances change. We will remain in open dialogue with the DGE and will update them on changes in our situation as they occur.”
PokerStars is not the only firm impacted by the denial, as Resorts Casino Hotel is currently on the outside looking in when it comes to New Jersey internet gambling. The group was awarded a gaming license on the same day that the PokerStars denial come to light, but currently has no partner with which to offer betting services.
Interestingly, New Jersey could also be negatively impacted by the absence of PokerStars from its gaming industry. The poker giant is viewed as a potential major player in a legalized New Jersey market, and could gather a large share of the state's online poker sector.
Speaking about the absence of PokerStars' absence, New York Gambling Attorney Brad Polizzano said, “It’s a blow, obviously. Pokerstars is going to have to decide just how much they want to be in the market. They could just stay out of the U.S. if they wanted to. Obviously being here means a lot to them because they’ve hired lobbyists to pull for their interests. They may have to be willing to make some changes.”
It is unknown whether or not PokerStars will attempt to get the application freeze lifted, as any move to improve chances would likely require booting Scheinberg from the company or have the executive turn himself in to US authorities.