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NEWS 12 October 2015

PokerStars investigation by the DGE could have been catastrophic for the operator, says Chris Grove

By David Cook
The New Jersey Division of Gaming Enforcement’s (DGE) investigation into Amaya Gaming’s acquisition of Oldford Group had a significant chance of resulting in the blocking of PokerStars entering the New Jersey i-gaming market, according to online gambling consultant Chris Grove.

The regulator released a report on its findings, after Amaya announced in September it had been granted approval to operate its Stars and Full Tilt brands in the state.

An order of Amaya’s transactional waiver was also published, which the provider filed for in October 2014, after completing its $4.9bn purchase of Oldford Group, the parent company of Rational Group, the previous owner of Stars, in August of the same year.

Speaking to Gambling Insider , Grove said the importance of the investigation should not be underestimated and that the New Jersey i-poker market will ultimately be better off with Stars operating within it, though there are some problems for the market that it can not fix.

He said: “Given that the DGE laid out several specific conditions for approval stemming from the investigation, it seems to me that there is an extremely high chance that the investigation could have ultimately resulted in PokerStars not returning to New Jersey.

“It's hard to view the return of PokerStars as anything but a win for New Jersey's regulated online poker market. With that said, the market itself faces fundamental structural limitations - such as population and payment processing difficulties - that PokerStars can't do much about. The New Jersey online poker market has a clear ceiling, and I'm not sure that PokerStars can move it beyond that ceiling.”

Stars’ US operations were shut down by the US government in 2011 and its founder Isai Scheinberg faced a federal indictment for allegedly violating the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) and the Illegal Gambling Business Act.

The DGE said Amaya must separate itself from “four individuals identified by the Division as having failed to establish the requisite good character, honesty and integrity required by the Act due to their involvement in the business activities of the PokerStars entities between the enactment of UIGEA and Black Friday [when indictments against the owners of Stars were revealed in 2011]”, on or before January 30 next year.

Those individuals were not named, but plenary investigations were conducted into Michael Hazel, Rational CFO, Rational COO Israel Rosenthal, Serge Bourenkov, general manager of PYR Software, a Scheinberg-founded company understood to be the technical development arm of Rational, and Charles Fabian, reportedly former head of games systems development at Pocket Kings, a now liquidated technology and marketing consulting provider which was a subsidiary of Full Tilt.

Amaya could not be reached for comment.
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