Wendeen H. Eolis

By Wendeen H. Eolis

The surprise move in the gambits of gaming companies seeking to position themselves for future fortunes in the online and commercial gaming market came last week from an unlikely source, the Atlantic Club Casino and Hotel (ACC) in Atlantic City New Jersey. The casino insulted Rational Group  U.S. Holdings (PokerStars), dismissing its friendly bid and preliminary agreement to buy the property, suddenly, as too little too late.

PokerStars did not take the insult or the alleged injury to its plans lying down. On May 5, PokerStars responded with a lawsuit and yesterday  the online poker behemoth followed up, marching into court to obtain a temporary restraining order against the casino company [Read the Court Filing]. It was granted a preliminary injunction that prevents a fast sale to any other suitor while PokerStars makes it case to complete the purchase if it can obtain an Interim Casino Authority from New Jersey regulators.  

For the moment, PokerStars claims in scathing allegations of bad faith on the part of the ACC, its continued intentions to proceed toward completion of the purchase, noting the considerable investment it has already made in the property.

by Wendeen H. Eolis

PokerStars' purchase agreement for the Atlantic Club Casino and Hotel in Atlantic City has expired. In a public statement, this morning ,Michael Frawley, COO of Atlantic Club Casino and Hotel has confirmed that the purchase agreement is terminated.  Nevertheless, it is too early to jump to conclusions.
 
There is nothing said thus far to suggest that the two companies cannot re-cement an updated agreement. If necessary, PokerStars could update its completed application which has been submitted to the New Jersey Casino Control Commission.
 
When it comes to online poker, machinations, twists, turns, and outcomes unfathomable at one moment have been known to become stark reality the next.

PokerStars May Still be Valued in New Jersey

Governor Chris Christie, a proponent of a full court press to revive Atlantic City, faces massive pressure to find the means to recovery from Hurricane Sandy. PokerStars' promise to bring jobs, civic commitment and 40 million dollars to the project cannot so easily be dismissed.
 

By Wendeen H. Eolis

While most of the country was glued to the movements of Boston area law enforcement agents immediately after the Boston Marathon bombings, the US Attorney’s Office for the Southern District of New York had it sights set elsewhere on a sting against organized crime that was tied into a few game runners and players in high stakes poker games in New York. April has been a tough month for poker in New York City, more than once.
 

NY Poker Highlighted in Bust of Russian–Based Organized Crime Ring

 At the crack of dawn on April 16, 2013, federal agents were on the march to pick up their prey in Los Angeles, Philadelphia, Miami and California, as well as New York. They moved in with plans to break the back of an internationally based gambling enterprise rooted inside the Russian Federation.

 The accusations made by the Government marry illegal gambling activities to organized crime and put some of New York’s best known nosebleed poker games in the hands of old school “Russian Mafia” with locally based operatives intertwined in their operations.  

 Arguably, the April 16^th bust shone the brightest light over high stakes poker games in the underground world of New York poker—ever.

by Wendeen H. Eolis

BITAR BULLETIN

In a video-link proceeding, from a California courtrooom, Ray Bitar, a founder of Full Tilt Poker, was sentenced today by Chief Judge of the US District Court of New York, Loretta Preska, to time served and an estimated forfeiture of $40,000,000.

 In keeping with the unexpectedly compassionate deal reached between Government Prosecutors and Bitar's counsel, Jack Baughman of Paul Weiss et al, Ray Bitar is now positioned to seek the heart transplant required to save his life.

 Bitar was previously represented by Attorney Jeff Ifrah. Ifrah is now the center of a malpractice lawsuit brought by Chad Elie, a payment processor for Full Tilt Poker  who pled guilty in the Black Friday case against him. Elie is now serving a five month prison sentence. 

PokerStars, Caesars, Borgata, Showboat and Happenings in the State of New Jersey 

By Wendeen H. Eolis

 The application by Poker Stars for an Interim Casino Authority (ICA) license at the Atlantic Club Casino and Hotel in Atlantic City appears to be in limbo for the moment. The Casino Control Commission (CCC) has yet to announce the next steps in the process, but the Communications office of the CCC has confirmed that the licensing deliberations take place in meetings open to the public. 

AGA and PokerStars Are Subject to a Unique Bureaucratic Process

 Here is a quick review on recent events and a primer on the bureaucratic process that pits the American Gaming Association (AGA) against PokerStars in a bid to delay if not deny the online poker company’s entry into the American-based gaming market.   

 The AGA has opposed PokerStars’ application for a license and has asked the New Jersey Division of Gaming Enforcement (DGE) for permission to participate in its license application hearing.  PokerStars has shot back an indignant response to the DGE objecting to the AGA request. It has also leveled pointed accusations in the direction of the AGA and Caesars Entertainment as pots calling the kettle black.  

 The CCC which has responsibility for casino licensing matters received the AGA papers from the DGE. The DGE is the body that accepts petitions; the CCC has no authority to do so.  The bifurcated duties of these two regulatory bodies are clear to them but murky for most of the rest of us.  

 The DGE may make licensing recommendations but it is the CCC that is charged with issuance, suspensions and termination of casino licenses.  The DGE will be responsible for issuing online licenses to casinos qualified by the CCC.  So now you’ve got the picture of the bureaucratic process.  

 In the matter of the PokerStars application for an ICA, the CCC has elected to take a step back after the warring parties rattled their sabers relentlessly at each other. It is reportedly studying the situation before proceeding further on the application.

by Wendeen H. Eolis

The battle for supremacy in the emerging online poker market, stateside, is in full swing with a series of gambits by the American Gaming Association (AGA). The AGA has effectively delayed PokerStars’ anticipated acquisition of the Atlantic Club Casino & Hotel in Atlantic City by its letter and legal brief in opposition.

PokerStars is perceived as a white knight among poker players but as a black sheep by members of the AGA.

The various bones of contention are coming into sharper focus but some relevant matters of fact are becoming more murky. Lawyers supportive of the AGA stance and of AGA members most likely to be affected sooner than later have become increasingly vocal in response to this reporter’s request for help in dissecting the issues—in plain English.

Questions and Answers

More than a dozen lawyers representing both sides of the issues contributed questions and comments last week. This week the AGA supporters (on condition of personal anonymity)  reviewed their position and various documentation in an effort to flesh out the general consensus among them. One of the participants stepped up to provide  a voice on behalf of the prevailing views of AGA supporters interviewed.    PokerStars supporters in the group are expected to provide enhanced responses with references to legal documents, shortly. In the interim some of their initial comments are repeated to remind readers there are two sides —if not more— in this evolving story.

Note: For the avoidance of doubt, readers are advised that both PokerStars and the AGA declined to comment   on the Q & A  for this article  through their respective communications offices and none of the responses reflect authorized comment by either organization.  

 1. Why did Poker Stars conclude affirmatively that their online poker fare was legal in America after enactment of UIGEA?

by Wendeen H. Eolis

Over the past two weeks the American Gaming Association and PokerStars have sparred over the future of the online gaming company’s activities in Atlantic City. There is no end in sight for a battle that has AGA pressing the New Jersey Division of Gaming Enforcement (DGE) on behalf of its members into a long methodical examination of the merits of PokerStars’ entry into the United States casino market.  

While the plot thickens and the legal issues unfold, more than a dozen lawyers are responding to my call for help to dissect in plain English what is happening. Lawyer sources for this article have intimate knowledge of the online and live casino industry. Many have represented one or more of the following: PokerStars, MGM, Caesars, other brick and mortar casinos and online gaming companies and/or the AGA. They weigh in today on a few of the questions they have brought to the table for discussion. 

Author's disclosures: The  writer is a a legal consultant but not a lawyer and therefore does not offer legal advice and  does not express any legal conclusions in the matters presented in this article.This acknowledges without specific reference that the writer and/or EOLIS companies have had business dealings at one time or another with most of the businesses mentioned in this article and necessarily, have retained confidences provided in the context of those relationships.

Please also note: For the avoidance of doubt, readers are advised that no spokesperson for either PokerStars or the AGA was solicited for comment with regard to this article and none of the responses reflect authorized comment by either organization

The questions and the summarized answers provided as a result of consulting with a wide variety of gaming law experts and white collar crime specialists follow:

1. Why did Poker Stars conclude affirmatively that their online poker fare was legal in America after enactment of UIGEA?

By Wendeen H. Eolis

Unlikely collaborations as well as predictable conflicts have marked the relationship between Caesars Entertainment, Inc. (formerly Harrahs) and PokerStars (Rational Group) since the enactment of the Unlawful Internet Gambling Enforcement Act of 2006. For the moment the collaborations seem like bygones.

The American Gaming Association, a trade group that is best known for representing the interests of commercial casinos in Nevada and almost as well known for its close ties to Caesars took the unprecedented step last week of opposing PokerStars' efforts to obtain a gaming license In New Jersey.

The Association has effectively picked up where the United States Department of Justice left off in its settlement last summer with PokerStars.   Last July, the DOJ settled its  civil claims against the Company, arising from the government's ballyhooed prosecution of online gaming. The cases  originated April 15, 2011 in  the indictment  U.S. v Scheinberg et al.

By Wendeen H. Eolis

 A complicated relationship between Rational Group (PokerStars) and Caesars Entertainment has begun to reveal itself in earnest in recent weeks with an eclectic crowd of movers and shakers surrounding the players at the top of their respective pyramids.

 The two companies, with assistance from empowered supporters, have been known to deliver understated slaps back and forth over the years, but lately the protagonists are exchanging more powerful blows.

 Members of the Scheinberg family and top executives in the corporate empire of Caesars Entertainment are in the mix. So are the likes of American Gaming Association president, Frank Fahrenkopf, who will soon take his leave from his longtime position there.

 The cast of characters in recent machinations between the two companies has also included Scott Wilson, a business consultant/professional gambler with powerful connections. He was the spark that ignited a telephone call between Caesars and PokerStars -- the call that was heard around the world last week in a report by Nathan Vardi in Forbes  Magazine.

Mark Scheinberg and Mitch Garber are the key players in the sandbox

 Poker Player Newspaper has learned the identities of the "two high level officials" that were referenced without attribution in the Forbes article. They were Mitch Garber, CEO of Caesars Interactive and Mark Scheinberg, CEO of PokerStars.