PokerStars CEO Pays $50 Million for Clean Bill of Legal Health

DOJ to Scheinberg on company efforts to buy NJ casino: GL

by , Jun 18, 2013 | 12:54 pm

With Black Friday cases winding up, Mark Scheinberg could make out as the biggest winner in the poker universe.

With Black Friday cases winding up, Mark Scheinberg could make out as the biggest winner in the poker universe.

The chief executive of online gaming giant PokerStars agreed to forfeit $50 million to federal prosecutors to rid his himself of a two-year-old complaint filed by the U.S. government.

In a settlement agreement this week with the Department of Justice, the money being paid by PokerStars CEO Mark Scheinberg is based on allegations contained in the April 15, 2011, complaint filed by federal prosecutors against PokerStars as part of the government’s “Black Friday” crackdown on illegal Internet gaming operations.

“The agreement is not in response to any action that had been brought against Mark and contains no admission of wrongdoing, culpability or guilt on his behalf,” PokerStars spokesman Eric Hollreiser said in an emailed statement.

Last July, PokerStars accepted a $731 million forfeiture to the federal government to end the company’s legal battle with prosecutors.

Three senior officers of PokerStars were charged in April 2011 with bank fraud, money laundering and running an illegal Internet gambling enterprise.

The Justice Department absolved the company of any wrongdoing in accepting Internet wagers from American customers. PokerStars also wasn’t prohibited from entering legal U.S. gaming markets.

Meanwhile, PokerStars Isle of Man-based parent company has appealed a judge’s May 17 ruling that ended the company’s efforts to acquire an Atlantic City casino.

In a filing this week in New Jersey state court, the Rational Group said the judge made several errors, including misinterpreting a time limit for getting the deal done.

Hollreiser declined comment on the legal filing.

PokerStars wanted the Atlantic Club to serve as the hub for its legal Internet gaming business in New Jersey. The state hopes to launch Internet gaming by Thanksgiving and has restricted operation of the website to Atlantic City’s 12 casinos.

The state Gaming Enforcement Division has told the casinos they have until June 30 to arrange Internet gambling deals. New Jersey gaming regulators need time to examine the qualifications and backgrounds of the companies partnering with the casinos.

Gibraltar-based online gaming giant Bwin.party is a partner with Boyd Gaming Corp. which operates the Borgata.

Caesars Entertainment’s four Atlantic City casinos are partners with 888 Holdings, which operates European online versions of the World Series of Poker for Caesars Interactive Entertainment.

Earlier this year, Rational Group agreed to pay $15 million for the Atlantic Club, which would allow PokerStars to become the first online gambling company to own a land-based casino in the United States.

Rational Group already paid $11 million of the purchase price, claiming the money was used to keep the Atlantic Club open during the winter.

PokerStars said the 120-day deadline should have started from the day their application for state approval to run a casino was deemed complete, not from the date of the sale contract.

The Atlantic Club claimed it had the right to end the sale because the Rational Group failed to obtain New Jersey regulatory approval for the deal by an April 26 deadline agreed to by both sides.

The Atlantic Club has operated under several names and has been owned since 2005 by Resorts International Holdings, an affiliate of the California-based private real-estate investment firm Colony Capital LLC. The casino suffered a $19.2 million operating loss in 2012, following a nearly $20 million loss in 2011.

For the first five months of 2013, gaming revenue at the Atlantic Club is up 27 percent, including an industry-leading 25 percent increase in May.


The Associated Press contributed to this report. Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.


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