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New Jersey DGE approval of PokerStars leaves many disinterested




PokerStars was finally given approval in New Jersey to start operating. However, this may not be the game changer that poker enthusiasts and polticians are hoping for.

Last week the New Jersey Division of Gaming Enforcement (DGE) finally gave their approval for PokerStars to start operating in the state's regulated online poker market. The decision was a long time coming. But, is it too little, too late?

The story regarding PokerStars and New Jersey dates back to April 2011 when the FBI seized the domains of PokerStars, Full Tilt and Cereus (by far and away the 3 largest U.S. facing poker companies) which resulted in the sites cutting off U.S. customers. PokerStars was able to repay all its global players right away (including those in the U.S.) since they kept post up funds in a separate account from operating funds, but Full Tilt and Cereus didn't have the funds to pay, since neither separated their funds. Cereus, which only had a fraction of the players that the other two websites, eventually shut down Absolute Poker and Ultimate Bet while Full Tilt continued to try catering to non U.S. customers. After some investigation it was revealed by the Department ofJustice that Full Tilt was actually operating in the red and was conducting a type of elaborate Ponzi scheme (something the company denied). Alderney eventually withdrew Full Tilt's license and Full Tilt customers were left in a pickle. It appears the DoJ actually believed that exposing Full Tilt for the fraud they were would result in accolades from both players and the casino industry, but instead players were furious and appeared ready to show their displeasure at the voting booth in 2012. This was further exacerbated when the Poker Player's Alliance (PPA) suggested that players vote against certain candidates that were responsible for Black Friday.

Both Alderney and the DoJ began looking for a buyer for Full Tilt, obviously for different reasons, and Alderney believed they had a suitable buyer in the form of a French businessman. It was clear, however, that the French company (Group Bernard Tapie) had no intention of paying back U.S. players, nor were they prepared to give the DoJ anything toward their expenses in the whole Black Friday affair. As a result the DoJ effectively stopped the sale to the French company and gave PokerStars an offer they couldn't refuse. In return for $714 million the DoJ would effectively give PokerStars a pardon which would allow the company to operate in the U.S. in the future. The $714 million entailed repaying Full Tilt customers worldwide and paying a fine to the DoJ for wrongdoings, although PokerStars didn't have to admit to improprieties. PokerStars agreed, paid the money and immediately started looking to the U.S. market when New Jersey passed a law to allow online gambling in the state.

online poker in NJPokerStars made an offer to purchase the Atlantic Club Casino which was set to close thereby saving thousands of jobs and providing some funds to casino owners. But the deal was never consummated for various reasons including the other casinos and their representatives the American Gaming Association, who told the state that PokerStars should be excluded for at least 2 years as a result of their past wrongs. It appears at this point the DoJ informed PokerStars that their feud was now with New Jersey and there was nothing else they could do despite being given a bill of good health for the $714 million. There was also every indication that Governor Chris Christie also blocked the sale to appease Sheldon Adelson, who didn't want PokerStars operating in the U.S. In fact Business Insider even reported that Christie was directly behind the failed sale although Christie denied it.

The next year in 2013 PokerStars agreed to a partnership with Resorts Casino which would entail a $10 million poker room at the Atlantic City casino and would create 1,000 jobs. This was welcome news since Resorts Casino, who like all casinos on the A.C. boardwalk, was struggling, but again the move was apparently stopped and the DGE said the deal would not be allowed because of outstanding charges against PokerStars owner Isai Scheinberg. Finally, conceding defeat the Rational Group which now owned PokerStars and Full Tilt agreed to sell the company to Amaya Gaming for $4.9 billion in 2014 and all previous owners would walk away from the business. With the new owners in place the DGE's stated concern about Scheinberg was void and Amaya's owner David Baazov stated that he expected PokerStars to begin operating in New Jersey by the 3rd quarter of 2015 although there was hope that they would be operating earlier. According to sources the 3rd quarter of 2015 was critical since it gave the 2 year waiting period that the AGA demanded in 2013 and it provided the company with a lot of time to figure out how to make the biggest impact when they did set up shop. The date was also close enough to the 2016 election so there was hope that the news wouldn't have any negative affect on Chris Christie's presidential aspirations.

PokerStars legal in New JerseySo it's now the 3rd quarter of 2015 and the DGE finally gave its approval for PokerStars to start operating but the mood is quite muted. Reaction from Ray Lesniak and other politicians who have been calling for the state to allow PokerStars to begin operating has been non-existent and Eilers Research which earlier said that PokerStars' entry would lead to massive growth in poker in New Jersey seems to have changed their projections. Moreover people in New Jersey do not even seem to be that excited. I spoke to my two regular Jersey contacts, John from Trenton and Henry from Jersey City, but neither was overly excited about the news.

John admitted that he was never a huge poker player but earlier believed that once PokerStars came to the state he would participate. "I had a PokerStars account for years and used to like to occasionally play high payout tournaments for a low fee, but this is different. I highly doubt that the offerings PokerStars once had when they were based in Europe will be the same now. And from what I've encountered in New Jersey thus far, I'm not impressed. I did sign up with an account at Borgata but I find the pace of play slow and the offerings not that great. I haven't played there in months. I have no reason to believe that PokerStars will be any different."

Henry on the other hand was quite more vocal. When I interviewed Henry regarding NETeller offering payments to New Jersey residents in November 2014 he was quite upset about PokerStars:

""I love PokerStars, I miss PokerStars and I've won a lot over the years at PokerStars. So I was thrilled when I found out PokerStars was going to be returning to the U.S. with a website in New Jersey. Then I found out that the government was banning PokerStars from New Jersey due to past wrongs, yet they welcome NETeller? How hypocritical is that? I also believe PokerStars paid the government a lot more money than Neteller ever did. If you're going to ban one group then either ban them all or let bygones be bygones."

But Henry's mood now seems to be quite different:

"Am I happy about PokerStars coming to New Jersey? I would be if it was really PokerStars, but what's coming here isn't PokerStars. They were bought by some Canadian company and anyone with a brain knows that what we will get isn't the PokerStars that ran until Black Friday. What made PokerStars stand out from the rest is that there were so many customers that whenever you went to the website, whether it was 3:00 in the afternoon or 2:00 in the morning, there would be full tables and all forms of games available. But since this is New Jersey only it will be no different than what is happening now at WSOP or Borgata. I have accounts at both places and I can usually find a reasonable table on a weekend or evening but during the day and especially after midnight there's no one there. After all there's probably a few thousand players all spread out among a couple of websites and everyone goes to work at the same time. So it's impossible for PokerStars to be anything resembling what it was in its heyday. In fact there will be even less players in the room since 3 sites will dilute the players that are there. I'll set up an account when they do become operational, but I'm not hoping for much. I hope I'm wrong but I have a sneaking suspicion that it will be no different than my other accounts. Now if the whole U.S. legalizes online poker, and if PokerStars can set up a nationwide poker network, that's when I'll get excited. Interview me then."

The feeling on the world largest poker forum 2+2 is mixed in a 17-plus page thread about the news of 'Stars entry into New Jersey, with several players chiming in with positive notes. But there are also many posters like FastBF who posted, "With regards to some of the optimism the fellow NJ players have regarding the news, I wish I could share it." And BRm34eva added "(Stars) probably won't even be able to fill SNGs. Wake me when ROW is involved."

So to sum up the DGE in New Jersey finally gave PokerStars a license, but it seems unlikely they'll be able to start operating for a few months yet. Unfortunately because of the delay and because the other poker sites in New Jersey have not fared as well as was expected, the excitement that existed in 2013 and 2014 in the state, when there was an indication that PokerStars would start operating, has diminished greatly. There is a lot of skepticism by players that this state run version of PokerStars will not be anything like the site that produced stars like Chris Moneymaker and Johnathan Duhamel, and even politicians have stepped back from their original belief that PokerStars would be a game changer for the state.

There is still hope that they will be proven wrong, but given the limited players at WSOP (which maxes out at about 400 players) and Borgata (about 300 players) and given that other poker sites like UltimatePoker closed, it's hard to believe PokerStars will be much different just because in one state, the market isn't there to create volume.

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!