On October 1, 2015, the Division of Gaming Enforcement gave the long-awaited approval to PokerStars and Full Tilt Poker to enter the online gambling market in New Jersey. Since October 2013, the DGE has held up the licensing approval process, due to concerns over the poker site's old ownership's troubles with the United States federal government.
When Amaya Gaming bought PokerStars and Full Tilt Poker in August 2014, the speculation was approval for PokerStars and Resorts Casino, projected joint partners on a gaming portal, would be forthcoming soon. It took nearly 15 months to gain licensed and regulated status. Earlier today, LPS wrote about the long delay, citing an interview by David Rebuck on why the process had taken so long. Below is that article, which gives full details of why approval took so long.
David Rebuck Interview in Global Gaming Business
New Jersey Division of Gaming Enforcement Director David Rebuck gave an interview with Global Gaming Business this week about the possible inclusion of PokerStars to his state's online gaming industry. His answer was surprising to many observers of the U.S. online gambling industry, because they focused more on the company which acquired PokerStars in August 2014 than they did on the world top poker website.
David Rebuck told the interview that the Division of Gaming Enforcement is being thorough in its evaluation of Amaya Gaming for suitability. Describing a "comprehensive review", Rebuck said that the purchase of Rational Group (which owns PokerStars) was a part of the investigation. That is to say, the Black Friday scandal is not the focus of the DGE's research, but the acquisition of PokerStars itself.
Insider Trading Scandal
The DGE's director was referring to insider trading allegations stemming from Amaya Gaming's $4.9 billion purchase of Rational Group, which owns PokerStars and Full Tilt Poker.
The Autorite des Marches Financiers in Canada is investigating Amaya Gaming for insider trading. The probe involves securities trading in the days and weeks leading up to the purchase of Rational Group. The investigation was announced late last year, but largely forgotten by much of the gaming media.
DGE's Probe into Amaya Gaming
Rebuck said the Division of Gaming Enforcement's own probe has involved interviews with 80 different people with information to provide on Amaya Gaming and its purchase of Rational Group. These interviews have involved travel to foreign countries, which likely would be Canada and (perhaps) the Isle of Man and the United Kingdom.
In describing the probe of Amaya Gaming, David Rebuck suggested that the investigation would be pivotal in the United States and abroad. The suggestion is that Amaya Gaming's future good reputation is at stake, which could have an effect on licensing both in the US and abroad.
How America Leads in Licensing
It is well-known that licensing in the United States often has a positive effect on companies which want licensing in other parts of the world, especially in the Western Hemisphere. When licensing authorities in Caribbean countries and Latin America vet a gaming company, they often use U.S. licensing as a guage for their own efforts. Faced with limited resources to investigate a company's background, foreign agencies use U.S. approval as a rubber-stamp.
How New Jersey's Approval Is Key
But David Rebuck's revelations go well beyond such common knowledge. He discussed how the DGE's vetting of Amaya Gaming was likely to be used by other U.S. states when they look at the gaming company. The surprising part is the idea that Amaya Gaming might not entirely be the focus, but online gambling itself.
This is what David Rebuck meant. It has been reported here that California and Pennsylvania each have considered motions which would ban PokerStars from their online gambling industries, based on their spotty history with the U.S. Justice Department, stemming from the Black Friday Scandal.
PokerStars as a "Bad Actor"
Significant lawmakers in those states and the gaming interests they represent want to ban PokerStars as a "bad actor". In each case, the legislature has not been able to agree on the correct language to legalize online gambling, whether with online poker rooms only or alongside Internet casinos. Either way, PokerStars is a major sticking point, with some influential figures wanted the company licensed and others wanting the company banned.
David Rebuck suggested that those states are going to look closely at New Jersey's own licensing process. The implication is, if New Jersey ends up approving PokerStars (and Amaya Gaming by proxy), then other U.S. states are likely to follow suit. Thus, licensing for PokerStars has (seemingly) stalled while the probe continued.
Ray Lesniak Critical of Administration
That has not always been the speculation. New Jersey State Senator Ray Lesniak, who might be running for governor in 2017, has criticized the DGE for dragging its feat for politically-motivated reasons. Sen. Lesniak has suggested that the New Jersey administration has delayed licensing for PokerStars because Gov. Chris Christie is still wanting large political contributions from Sheldon Adelson, who is a top Republican donor, the world's richest brick-and-mortar casino executive, and a stout opponent of online gambling in any form.
The long delay in licensing has given legs to Lesniak's version of events. Throughout 2015, Amaya Gaming's CEO, David Baazov, has suggested that licensing was a short time in the future. As those predictions have fallen by the wayside, people have wondered why New Jersey regulators have failed to act. In the absence of an explanation, Lesniak's interpretation seemed to have merit.
Conclusion on Rebuck's Comments
The interview with Global Gaming Business should put that speculation to rest. While some are likely to see Rebuck's statements as a public relations exercise, the truth behind his statements should be easily verified. If the DGE was simply being thorough, because it knows how pivotal to the online gambling their decision is, then the DGE might have done legalized online gambling in the United States a big favor.
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